Impacts of Trump Tariffs on Hospitality Furniture

If you’ve been involved in planning or organizing a Hotel Construction project in the past few months, chances are you’ve heard at least one person bring up tariffs. Even though Donald Trump has yet to take office for his second term, many are already wondering how new tariffs on China will affect their projects. It is predicted these tariffs will influence supply chains, channeling more work towards Southeast Asia. While some predict the high tariffs are nothing more than a bluff from the future president, others, including manufacturers, are taking key steps to prepare for global uncertainty.

Over the past months, incoming President Donald Trump has made multiple, sometimes conflicting, social media posts about his plan on tariffs. At times he targets all global imports into the US, touting rates as high as 20%. At other times he’s laser focused on certain countries, such as Mexico, Canada and even the BRICS nations. By far the biggest target for Trump is China, against whom he promises rates of 60% and more.

Previous China Tariffs and their Impact

During his first term in office, Trump enacted tariffs against $50 Billion Worth of Chinese imports, as a way of responding to intellectual property theft by Chinese factories. This started a two year trade war between the US and China, an action that many say hurt America’s exports over the long haul. For the Hospitality Construction industry, the largest impact was a lasting 25% tariff on China Products that is still in place today. This increased the price of China-made FF&E, especially items made from products like engineered stone.

While some clients and purchasers elected to swallow higher fees, many set their eyes on other countries in the region, such as Vietnam and Indonesia. Ultimately China based businesses adjusted to these tariffs as well.

“One of the first things we noticed [after these tariffs were enacted],” says Sebastian Lang, one of the co-Founders and Principals of Miami-based FF&E Manufacturing company Lang & Schwander, “was the emergence of new facilities in Vietnam that had Chinese backing - or even dual manufacturing in both counties. Many still get materials and furniture components directly from China.”

Indeed, Southeast Asia did benefit from the Trump Tariffs of 2018. ASEAN Countries (Indonesia, Vietnam, Laos, Brunei, Thailand, Myanmar, the Philippines, Cambodia, Singapore and Malaysia) found their share of US Imports growing a few percentage points in reaction.

While there was a push for new sources, the overall reaction from the manufacturing community was mixed.

“Even with the [2018] tariffs, China still has better pricing than any other country.” said Lang. “It’s hard to find places that are set up for that level of production.”

Future impacts on the Supply Chain

Last year China slipped into second place for most exported goods into the US, with Mexico taking the lead. Some say this marks the beginning of a global shift in supply chain - one that favors Southeast Asia and Latin America production. Jayant Menon, a senior fellow at Singapore's ISEAS-Yusof Ishak Institute believes this to be a strong possibility

“The speed of relocation will increase, and we will almost certainly now be looking at a world of bifurcated supply chains,” said Menon in an interview with VOA News. “...Countries that can closely replicate the costs and conditions in China will benefit, and at the moment a lot of those countries are in Southeast Asia. Other countries can benefit if they respond to this opportunity, but at the moment Southeast Asia is the closest competitor.”

After the 2018 round of Tariffs, Menon said many of the factories leaving China settled in Malaysia, Thailand and Vietnam. He added that two other countries - Cambodia and Laos - could also be attractive based on their proximity to China.

Could Tariffs be as bad as predicted?

With most of the communication about tariffs happening over social media, many industry leaders are questioning whether they will actually happen - or they are simply negotiating tactics. In an interview with Construction Drive, Anirban Basu, chief economist at Associated Builders and Contractors, paints a different picture. “A lot of these announced tariffs are simply posturing by the president. He’s using this as negotiating leverage,” said Basu. “My best guess is that we will see a modest increase in certain targeted tariffs, but nothing massive, as has been proposed.” Trumps actions may support this conclusion. After posting on Truth Social that he would pose a 25% Tariff on Mexico and Canada as a way of enforcing border security and drug control, Trump was able to have seemingly successful calls with both the President of Mexico, Claudia Sheinbaum Pardo, and the Prime Minister of Canada, Justin Trudeau. This suggests his threats have been efficacious in jumpstarting negotiations. What this means for Hotel Owners

While the details, timing and exact percentages in the new batch of Trump tariffs have still not been defined, many in the Hospitality construction industry are already trying to plan their strategies for projects in their 2025 and 2026 portfolio.

For some, the issue isn’t with the tariffs themselves, as much as it is their impact on the market and interest rates. Many Hotel owners are planning on securing loans earlier in the process to lock in a lower rate. Other owners are running budgets with higher contingencies, and looking at manufacturers that offer a wider web of factories.

Niel Flavin, Chief Operating Officer of Asset and Hotel Management at HVS said that developers in the industry “need to plan for the purchasing of goods and, to some extent, services prior to any of these tariffs going into place.”

Some Manufacturing companies are more optimistic. Lang says he is not worried about the impact tariffs will have on him and his company.

“As a 17 year old company, we’ve weathered global supply chain changes before” says Lang. “ We’ve spent the past few years diversifying our factory network to be three times the size it was a year ago, so we’re confident we can get the best pricing for our customers.”

He says the company has maintained a proactive, but steady approach through the end of year uncertainty. “We find the best success in maintaining transparency and flexibility - especially when the information is still not clear. I don’t think anyone at this point knows exactly what Trump is going to do on his first day of office, but I do know we’ll figure out solutions that work for our clients.”