Williams-Sonoma (WSM) CEO Laura Alber hasn’t waited for President Trump to enact more tariffs on China.
She has taken action and could take more action in the years ahead.
“In the first Trump administration, we saw the first wave of tariffs, and we reduced our China exposure by 50%,” Alber told Yahoo Finance at the World Economic Forum in Davos, Switzerland.
The home goods and furnishing retailer now relies on China for 25% of its sourcing, Alber says. About 81% of its merchandise is sourced from Asia and Europe, according to its latest annual report.
“We aren’t waiting for the next wave of tariffs. We’ve been working to continue to move our product elsewhere. So whether it’s elsewhere in Asia or even in the United States. Most of our upholstery furniture is made in Mississippi or North Carolina,” Alber added.
Trump tariffs lurk as a dark cloud over consumer companies ranging from Best Buy (BBY) to Target (TGT).
During his run for another term, Trump pitched several ways he could increase tariffs. Those included a 10% to 20% tariff on all foreign imports, a 60% to 100% additional tariff on Chinese imports, and a 25% tariff on Mexican and Canadian imports.
Read more: How do tariffs work, and who really pays them?
Tariffs could materially impact furniture makers, as a good chunk of their merchandise is sourced from low-cost producers in China.
Williams-Sonoma explained in its annual report that it could be forced to raise prices due to tariffs, which may weigh on consumer demand.
“Tariffs make it more difficult for us to maintain the low prices and be affordable for many people, which in the end is our goal. We have never experienced a period of benefit when we had high tariffs,” IKEA CEO Jesper Brodin recently told CNN.
American consumers could lose between $46 billion and $78 billion in spending power each year if new tariffs are enacted by Trump, the NRF estimated.
“We continue to believe the threat of tariffs is more bark than bite, particularly given the cumulative effect of inflation over the past four years,” JPMorgan analyst Christopher Horvers wrote. “That said, while the depth and breadth of potential tariffs remains uncertain, we see toys, home furnishings, and electronics as most at-risk given high sourcing exposure to China (25-50%) and less pricing power, while home improvement and grocery safer given lower China exposure (10-15%) and higher pricing power, with autoparts straddling the two buckets (30-50% China exposure but strong pricing power). Of course, should the incoming administration place tariffs on all imports (vs. just China-sourced imports), the game changes.”
