How Tariffs On China Are Reshaping The Home Goods Sector

Over the past month, the U.S. economy has faced renewed challenges due to escalating trade tensions with China. Significant duties remain despite the Trump administration’s partial rollback on specific tariffs. As of mid-April 2025, many imports from China, including home goods, are subject to a 145% tariff, and the U.S. is subject to a 125% tariff from China. Some negotiations and exemptions have been made on US imports to China, but the reverse has yet to be resolved, with the latest being an end to the tariff exemption on low-value shipments.

China is pivotal in the U.S. home goods market, making up 27.7% of the category’s imports. It accounts for $18.5 billion of furniture, bedding, cushions, lighting, etc. This substantial reliance underscores the sector’s vulnerability to tariff-induced disruptions.​

The imposed tariffs have increased importers’ costs, which are often passed on to consumers. Retailers and manufacturers grapple with supply chain adjustments, alternative sourcing options, and inventory challenges. The U.S. economy, already experiencing volatility due to inflationary pressures and interest rate fluctuations, faces additional strain from these continued trade tensions. Businesses must navigate the direct financial impacts of increased tariffs and the broader economic uncertainty that could influence consumer confidence and spending patterns.

Consumer Sentiment On Home Goods

The continuation of high tariffs has notably shifted consumer behaviors within the home goods market. Lee Mayer, CEO of home furnishings company Havenly, pointed out that the middle-market consumer segment has significantly pulled back, particularly those considering modest redecorations. Havenly’s brand, Interior Define, can track consumer interest by examining how many consumers have ordered sample fabric swatches. Mayer noted, “We see a seven-day average of the number of swatches coming in… on April 2^nd, it falls off a cliff and has not recovered. Oddly enough, revenue is still there, but it’s the up-funnel consumer demand that we’re more worried about.”

Similarly, Natalie Gordon, CEO of Babylist, shared observations of altered consumer behaviors in the essential baby products category. Gordon explained that parents are making purchases sooner than they typically would, driven by fears of rising prices and availability issues. Babylist’s “open to secondhand” registry feature has seen rapid adoption, highlighting an increasing consumer preference for cost-saving measures amid tariff-driven price hikes. According to Gordon, “We’re now seeing 67% of expecting parents saying getting baby items secondhand is the number one way they are looking to save on costs.”

This shift reflects growing consumer caution and a heightened sensitivity to price changes, influencing spending habits across multiple home goods categories.

Affected Home Goods Categories

Specific categories within home goods and decor are experiencing outsized impacts due to tariffs. Havenly is seeing that goods under that $250 mark and super-high-end price points don’t seem that affected, but the middle-range 81-inch sofas that are higher end but not super high-end are seeing a slowdown. For Babylist, essential items like baby furniture and nursery decor are primarily produced in China. Gordon emphasized, “Items like cribs are essentials that families can’t go without. Parents shouldn’t be forced to make trade-offs when it comes to a safe sleep environment for their baby.” She further warned that prolonged tariffs could significantly disrupt supply chains and escalate prices, disproportionately impacting families under financial strain.

On the other hand, East Fork, known for domestically produced pottery, offers a contrasting perspective. CEO Alex Matisse noted their relative insulation due to local manufacturing but recognized potential advantages as tariff-induced price increases narrow the gap between imported and domestically made products. “Our customers come to us because they care about craftsmanship, aesthetics, and connection—not low prices,” Matisse explained. “That said, if tariffs drive up prices on imported home goods, the narrowing gap could make more consumers reconsider where they’re spending their money. If the price difference between a commodity bowl and an East Fork bowl shrinks, we may see new customers opt into a product with deeper values and story.”

This reveals that while some segments may see opportunities amid the tariff challenges, others face critical risks, highlighting the uneven impacts across the industry.

Shifting Sourcing Strategies

Amid tariff pressures, businesses across the sector are reassessing their sourcing strategies, swiftly shifting away from Chinese manufacturing despite the complexity and cost. Havenly, for instance, has drastically reduced its reliance on Chinese production, moving significant operations to Vietnam, Cambodia, and Mexico. In late 2024, the company’s largest brand, Interior Define, had 80% of its products imported from China, and by the end of April, it was anticipated to hit 0%. This rapid shift has led to immediate financial impacts and operational challenges, including increased production costs and extended product lead times.

Despite this fast change, the company is dealing with millions in sunk costs due to products that customers had already ordered, putting them in a position where the tariffs could not be passed on to the consumer in time. Apple recently announced a similar issue, shifting its production of most iPhones to India and other products to Vietnam. However, despite Trump sparing some electronics from new tariffs, the company shared an estimated $900 million in additional costs in its current quarter. These sourcing changes underline the industry’s adaptability and expose the complexities and expenses of pivoting away from established supply chains.

Babylist, a marketplace that does not source the items directly, is helping vendors make the price changes necessary to manage the increased costs. “We’ve assembled an internal task force that’s monitoring the situation daily—working closely with our vendor partners to understand current and upcoming price increases and ensuring our tech and product teams are optimizing key features like price comparison, price alerts, and ‘open to secondhand’ so registrants and their communities can continue to find what they need, affordably,” shared Gordon. The company anticipates that car seats, strollers, and nursery furniture will be significantly impacted because most are manufactured in China. Although the brand can’t change where these items come from, they can help consumers find the most affordable option.

Projections and Industry Outlook

Home goods and decor brands remain cautiously optimistic yet realistic about the industry’s future amid persistent uncertainty. Mayer articulated this sentiment, sharing, “Going into this year, many of us felt optimistic. Interest rates were dropping at the end of last year, and it looked like the economy was going to have a soft landing. Now we’re back in a holding pattern.”

Matisse from East Fork echoed the cautious outlook, emphasizing broader economic concerns over isolated tariff impacts. “My biggest concern is less about tariffs in isolation and more about the broader economic uncertainty they can generate. If these pressures tip us back into a recession, that would affect every brand in the category,” he explained.

Industry-wide data supports these tempered projections, with indicators pointing towards continued consumer caution and potential short-term market contractions. The risk of a recession remains elevated, with J.P. Morgan estimating a 60% chance.

Companies like Babylist are actively advocating for targeted policy relief, hoping to mitigate long-term harm to businesses and consumers. Gordon noted, “Without relief, we foresee higher prices, constrained availability, and cascading impacts across the market—outcomes that will harm businesses and families alike.”

Given its significant dependence on Chinese imports, the home goods sector faces unique vulnerabilities, positioning it among the industry’s most deeply impacted by current tariff challenges. As businesses adapt to these conditions, clear communication with consumers and proactive industry advocacy will be critical. However, the objective measure of impact will depend on how effectively companies can adjust their sourcing strategies and navigate shifts in consumer purchasing behaviors amid ongoing economic uncertainty.