Understanding Your True Landed Cost: How Tariff Layers Are Reshaping Your Home Furnishings Business
The trade environment for home furnishings retailers has rarely been more complex — or more consequential. For many businesses, tariffs are no longer just a line item on an invoice. They are a core operational variable that touches sourcing strategy, pricing decisions, and margin performance.
Yet many retailers, particularly smaller and mid-sized operations, are navigating this landscape without a clear picture of how duties are actually calculated, what their options are, or where potential savings could be. We will provide a practical, accessible overview of how tariffs work, along with considerations retailers may find useful as they plan.
The current trade landscape: layers upon layers
For most home furnishings retailers importing from Asia, the duty burden they face today is rarely a single number. It is the product of multiple overlapping programs, each with its own rules, rates, and history.
The starting point is the standard “Most Favored Nation” (MFN) tariff rate applied to a given product’s Harmonized Tariff Schedule (HTS) code (the base duty that applies to most imports). But layered on top of that are additional duties for many products and countries that can significantly raise the total. Among the most relevant for furniture retailers:
Section 301 tariffs, originally imposed under the Trump administration in 2018 and carried through subsequent administrations, apply additional duties on a broad range of goods from China. Many furniture categories under Section 301 carry an additional 25% duty on top of the base MFN rate. These tariffs remain in effect today and were not affected by the February 2026 Supreme Court ruling that struck down IEEPA-based tariffs.
Section 232 tariffs apply to goods involving steel, aluminum, and copper on national security grounds. Effective April 06, 2026, a new proclamation modified how Section 232. Tariffs are applied, shifting from a tariff on just the metal content value of a product to a tariff on the full customs value. For furniture with metal frames, bases, or hardware, this change may materially affect landed cost calculations. The existing 25% Section 232 tariff on upholstered furniture, kitchen cabinets, and vanities also remains in place, with scheduled increases delayed until at least 2027.
What is “Duty Stacking”?
When multiple tariff programs apply to the same product, their rates accumulate — a phenomenon sometimes called “duty stacking.” A wooden sofa imported from China, for example, might carry a base MFN rate, a Section 301 surcharge, and potentially a Section 232 duty if it contains qualifying metal components. Understanding the full stack — not just one layer — is essential to accurately calculating landed cost.
ILLUSTRATIVE EXAMPLE
A retailer imports upholstered sofas from China. The base MFN duty rate might be around 6%. On top of that, Section 301 adds a 25% tariff. And depending on the frame’s metal content, Section 232 duties could apply to the full product value under the revised April 2026 rules. The total effective duty rate for a single SKU can easily exceed 30–35% — well above what a glance at a supplier’s invoice might suggest.
Many retailers do not realize how much their landed costs are affected until they conduct a thorough duty analysis by HTS code across their product lines.
Sourcing decisions and country of origin
One of the most direct levers retailers and their suppliers have in managing tariff exposure is sourcing strategy, specifically, where products are made and how that is documented.
Country of origin (COO) determines which duty rates apply to a given import. A product made in Vietnam will generally carry different duties than the same product made in China or Mexico. Vietnam and China together account for roughly 61% of U.S. furniture imports, with Vietnam at roughly 35% and China at approximately 26%. Both markets carry significant duty exposure, though the specific programs and rates differ.
Some suppliers have shifted production to third countries, partly in response to tariff pressures. However, it is important to note that country of origin is not simply the country from which goods are shipped — it is determined by where substantial transformation of the product occurred, under CBP rules. There are also growing concerns about transshipment enforcement, with indications that CBP may tighten rules on origin determination — particularly for goods manufactured in Southeast Asian factories owned by Chinese entities.
Retailers relying on suppliers who have recently shifted production may want to ask questions and obtain documentation about the actual manufacturing location and process — not just the country listed on the commercial invoice. Misclassification of country of origin, even when unintentional, can create compliance exposure for the importer of record.
A NOTE ON HTS CLASSIFICATION
The Harmonized Tariff Schedule (HTS) code assigned to a product determines which duty rates apply. Small differences in classification — such as whether a piece is classified as a “wooden chair” versus a “seat with wooden frame” — can result in meaningfully different duty rates. Retailers may benefit from periodically reviewing HTS classifications with a qualified customs broker or trade advisor, particularly when adding new product categories or sourcing from new suppliers.
Tariff refunds: a potential opportunity many are not tracking
One area that tends to be underutilized, especially by retailers without dedicated trade compliance staff, is the possibility of recovering duties already paid.
There are several mechanisms through which importers may be eligible to recover duties, depending on their circumstances:
Duty drawback is a long-standing CBP program that allows importers to recover up to 99% of duties paid on goods that are subsequently exported from the United States or used in the manufacture of exported products. Applications must generally be filed within five years of the date of importation, and claims require careful matching of import and export documentation. This program is most relevant for retailers who also sell internationally or who return merchandise overseas.
IEEPA-related refunds represent a more recent and significant development. On February 20, 2026, the U.S. Supreme Court ruled 6–3 in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs, opening the door to potential refunds of more than $170 billion in IEEPA-related duties collected since early 2025. The February 20, 2026, decision applies only to IEEPA emergency tariffs imposed in 2025. All other tariffs, including Section 232 and Section 301, are not affected by this ruling.
Importantly, these refunds are not automatic. CBP is developing a new system, the Consolidated Administration and Processing of Entries (CAPE), to handle refund claims at scale. Importers should ensure their ACE portal accounts and Automated Clearing House (ACH) electronic refund setups are complete, and organize their entry-level data for eventual claim submission.
Working with customs brokers: what to know
Most retailers importing goods rely on a licensed customs broker to handle entry filings, duty payments, and compliance documentation. This arrangement often works well — brokers bring expertise and efficiency that most retailers would find difficult to replicate in-house.
However, there are some practical considerations worth keeping in mind when working with third-party brokers:
Brokers typically file what you give them. A customs broker’s role is generally to ensure that entries are filed correctly based on the product descriptions, invoices, and HTS codes provided. They are not typically responsible for auditing whether those classifications are optimal for duty minimization — that is a separate, proactive exercise.
Refund opportunities may not be surfaced automatically. Brokers may not routinely flag past overpayments, potential drawback claims, or applicable tariff exclusions unless specifically asked to do so. Retailers who proactively review their import history may uncover recoverable duties that would otherwise go unclaimed.
Communication about product changes matters. If a product’s composition, country of origin, or primary material changes between orders, the HTS classification and applicable duties may change as well. Keeping brokers informed of product changes — rather than assuming continuity — can help avoid misclassification issues.
Modern trade management tools and emerging platforms are making it easier for businesses to maintain better visibility into their import data, duty costs, and compliance posture without requiring a large in-house team. For retailers evaluating their current approach, it is worth exploring whether additional visibility tools complement existing broker relationships.
Practical considerations for retailers in the future
The trade environment is unlikely to become simpler in the near term. New Section 301 investigations launched by USTR in March 2026 cover 16 economies — including Vietnam, China, Malaysia, Cambodia, India, and Mexico — and could reshape tariff exposure for key sourcing markets.
Against that backdrop, here are six areas retailers may find it useful to focus on:
- Map your HTS codes across product lines, and verify that classifications reflect current product compositions.
- Understand the full duty stack on your most-imported SKUs – not just the base rate, but all applicable surcharges.
- Review your import history for potential refund eligibility, particularly for IEEPA duties paid in 2025. Act before deadlines pass.
- Ask suppliers for documentation supporting country-of-origin claims, especially when production has recently shifted.
- Ensure your ACE portal and ACH banking information are up to date with CBP to avoid refund delays.
- Model landed cost scenarios across multiple tariff levels to ensure pricing decisions are not based on a single assumption about duty rates.
Trade compliance does not need to be the domain of specialists alone. With a clearer understanding of how duties are structured, where refund pathways exist, and how sourcing decisions affect total cost, retailers can approach these issues more confidently and potentially uncover opportunities that passive management would miss.
If you’re curious about what your actual duty stack looks like across your product lines, SAIL is a trade compliance platform that automates HS classification and landed cost analysis for importers. HFA members are welcome to explore a complimentary walkthrough by reaching out to ali@sailgtx.com.
This article is intended for educational purposes and does not constitute legal or customs compliance advice. Retailers with specific trade compliance questions are encouraged to consult a licensed customs broker or trade attorney.
