Tackling Tariffs
The design industry including homebuilding, construction, and residential and commercial design are all deeply connected to global trade, the economy, and shifting market dynamics. We saw this back in 2020 during the global pandemic when the world came to a standstill and our industry was faced with challenges like stalled shipments, increased lead times, and high cost of materials.
But now we have a new challenge on the horizon, one that is unprecedented and forcing us to once again, rise above and adapt: Government tariffs on imported goods.
A tariff is a “levied tax on certain imported goods, as well as all goods from certain countries, which is to be paid by the importer of that good once the shipment arrives in the US”. Throughout the last few decades, tariffs on goods have remained relatively static, with very minute fluctuations. That is why the current dramatic increase poses so much of a challenge, because now we are encroaching on uncharted territory and having to adapt to economic changes we haven’t seen before.
But just because something is uncharted, does NOT mean it’s impossible. The beautiful thing about the design industry is that it is full of intelligent, creative minds, that are willing to invent different avenues and methods to overcome challenges and best support the consumer; people like you!
Our goal is to not make you scared of these tariffs but to have the knowledge to 1. Know what’s going on 2. Understand how it can impact you and your projects and 3. Help you roll with the punches as things continue to change.
There are 4 main changes to the interior design industry that you need to know:
#1 Higher cost of materials
Raw materials are the foundation of every project and many materials—like hardwood, stone, and metal—are sourced internationally, unfortunately, making them vulnerable to tariffs.
When import taxes are placed on materials like steel, aluminum, and lumber, the cost of everything from flooring and cabinetry to custom millwork and structural beams goes up. Because we are having to pay more to get these materials stateside, it means there is an increased markup on the consumer. For example, if tariffs target stone from Italy, slabs of marble and granite will become significantly more expensive not because the stone itself has increased in price, but because of the tax that is put on that stone as it enters the United States. These factors might lead to the decision of designers and homeowners waiting to purchase stone until these tariffs decrease, opting to source from a lesser taxed country or even purchasing stone domestically.
#2 Increased lead times
With the tariffs needing to be paid at the border, some items that are in transit to the US are being stopped in their tracks or even turned around as companies and importers are unwilling to pay the extra fees to acquire their goods. We are not only seeing this in the design industry but also mainstream retailers like Target, who are pausing the import of certain shipments while they transition their factories out of heavily tariffed countries like China, into none tariffed countries like Indonesia.
These changes and fees are stalling shipments of a variety of materials and goods and resulting in increased lead times as there is more unpredictability of when items will arrive stateside.
When it comes to increased lead times, the best thing you can do as a homeowner is trying to remain flexible and if possible, plan in advance. For example, if you want new furniture for your patio in time for summer, it’s better to place that order in the fall or winter just to build in a bubble of time in case any of your furnishings get stalled or delayed. Your designer will work with you to navigate these delays and help you find a suitable replacement if your budget and timeline allow.
#3 Higher cost of European appliances, fixtures, & furniture
Throughout the last few decades, it was both convenient and cost effective to purchase appliances, furniture, and lighting fixtures from Europe which led to a lot of companies and designers to rely on international vendors and imported goods for their projects. Now with higher costs due to tariffs, designers are needing to shift gears away from European imports and source from different vendors to keep costs as low as possible for the consumer.
American furniture retailers are also having to adapt due to increase cost of foreign materials and European and Asian based manufacturing which is another contributing factor to higher prices on furniture.
#4 Shifting towards domestically sourced goods
One big change we will be seeing throughout the design industry is the shift toward domestically sourced goods in the effort to keep prices low and (hopefully) avoid tariffs altogether. This means sourcing materials like lumber, metal, and stone from the United States, and purchasing goods from American manufactured companies. This shift is going to help designers and homebuilders try to regain some control during this turbulent economic time and will ultimately inspire more companies to move stateside.
The only drawback is that there has been a massive number of materials, furnishings, and goods imported internationally for many, MANY years, so this shift toward domestically sourced goods will initially be met with delays and shortages as the US also works to adapt to a changing market.
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While all of this tariff talk sounds scary and higher costs and long lead times present challenges that frustrate designers, builders, and clients alike, on the flip side, a shifted focus to domestic sourcing, sustainability, and craftsmanship could bring exciting changes to our industry and alter the landscape of the design world forever.
Our job is to stay ahead of market shifts, communicate with our clients, and be ready (as much as we can be) for whatever comes next! Adaptability is key and we are committed to coming up with creative solutions that will help us weather the storm.