Merchandising in a 2025 Tariff Economy (Furniture and Appliances)

Merchandising in a 2025 Tariff Economy | Furniture and Appliance

Executive takeaway: A universal 10% reciprocal tariff on most imports and 50% Section 232 steel/aluminum tariffs (assessed on steel content) increase landed cost at receipt. 2025 tax changes (e.g., §199A at 20% made permanent) improve after‑tax cash flow but do not lower unit cost. Merchandising must shift mix toward duty‑light SKUs, normalize HTS/duty data in the SKU, run dual‑sourcing, and use PO timing/special‑order rules to protect contribution.

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1) Policy and macro snapshot

·         Tariffs: Reciprocal tariff baseline +10%; Section 232 steel/aluminum 50% (steel content basis); selected Section 301 (China) exclusions extended through Aug 31, 2025; China reciprocal rate temporarily held at 10% through Nov 10, 2025.

·         Tax: §199A (20%) permanent for pass‑throughs; bonus depreciation available on qualifying capex (cash‑flow aid, not a per‑unit cost offset).

·         Macro: July 2025 CPI—headline 2.7% y/y; household furnishings and operations +3.4%; furniture and bedding +3.2%; appliances −0.3% (category‑level averages; subcomponents vary).

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2) Merchandising implications (SKU → purchasing → replenishment → PO mgmt → special orders)

·         Duty‑aware SKU setup: Capture HTS/duty add‑ons, steel/aluminum flags, and country of origin at the product level; maintain duty‑inclusive cost for pricing decisions.

·         Vendor selection and sourcing: Reweight assortments toward low‑duty origins (e.g., non‑232/non‑301 lanes). Qualify secondary vendors for critical SKUs; maintain “flip‑to” sourcing playbooks.

·         HTS mapping and tariff engineering: Validate classifications; explore legit reclassification or minor spec changes to lower duty exposure.

·         PO timing and quantity: Use forward‑buy only when deadlines/rate moves are firm; otherwise pace receipts to avoid excess duty‑paid inventory.

·         Replenishment rules: Prioritize A/fast movers with acceptable duty burden; reduce breadth where duty makes price points uncompetitive.

·         Special orders: Time‑box inbound‑cost surcharges to new‑cost receipts; require deposits reflecting duty exposure; offer domestic/duty‑light alternates when lead times or duties spike.

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3) Practical strategies

·         Dual‑sourcing: Set up at least one alternate vendor/country per key SKU; negotiate volume‑flex clauses.

·         Assortment rationalization: Thin long tails in duty‑heavy categories; emphasize value tiers built on low‑duty inputs.

·         Materials substitution: For private label, favor constructions that reduce 232 exposure (e.g., less steel content) without harming quality.

·         Vendor negotiation: Tie price adjustments to documentary proof (origin, HTS, dates); seek concessions on chronic defect cohorts.

·         Special‑order design: Convert high‑frequency customs into stocked SKUs when duty and demand justify; standardize options.

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4) STORIS enablers for Merchandising

·         HTS/Duty tagging and Landed cost: Set duty/freight as landed‑cost add‑ons at SKU/PO; see estimated landed cost at PO and finalize at receipt.

·         Multi‑vendor per SKU: Maintain primary/alternate sources with distinct costs/lead times; switch sourcing on demand.

·         Assortment & planning reports: Analyze contribution after duty by category/vendor; open‑to‑buy with duty‑inclusive costs.

·         PO controls: Blanket/spot POs; date/quantity edits; variance and tolerance workflows; back‑to‑back POs for specials.

·         Pricing and margin rules: Guardrails tied to duty‑inclusive cost; promo/markdown tools aligned to contribution targets.

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5) KPIs (merchandising)

Special‑order fill rate/lead time and surcharge sunset compliance

Effective tariff rate (by category/vendor/country)

Contribution after shipping and duty (by SKU/category)

Dual‑source coverage (% SKUs with alternates)

Duty‑heavy inventory mix (% of on‑hand above threshold)

Vendor OTIF and cost variance vs PO

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FAQ

Sources (primary)

Congress.gov (tax); White House/Federal Register (tariffs); USTR (exclusions); BLS (CPI); peer‑reviewed tariff pass‑through research; STORIS product documentation.

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