What’s clouding local furniture sector?

AT the end of 2025, the US government said it was delaying tariff increases on furniture exports to the United States for an additional year as trade talks are ongoing.

Will this reprieve bode well for Malaysian-listed furniture exporters?

Recall that the US President Donald Trump had last August imposed a 25% tariff on most furniture exports to the United States. Subsequently, the United States said it would raise those tariffs to 30% for “certain upholstered wooden products” and to 50% for kitchen cabinets and vanities. This was to take effect on Jan 1. However, this has been postponed for a year.

The largest listed furniture exporters to the United States on Bursa Malaysia include Poh Huat Resources Holdings Bhd, Lii Hen Industries Bhd, Homeritz Corp Bhd, Heveaboard Bhd and Ecomate Holdings Bhd.

Generally, the stocks in this sector have fared poorly, under-performing the FTSE Bursa Malaysia KLCI.

Will the postponement of the tariff rise give the sector some upside?

Malaysian Furniture Council president Desmond Tan Boon Hai says tariffs aren’t the only reason for the choppy digits – higher costs and policy uncertainty have also impacted export volumes.

“At the same time, burdensome domestic policies on labour and other fundamentals have increased the operating costs. These combined factors have continued to squeeze the cash flow of manufacturers,” he tells StarBiz 7.

But, would the delayed tariff increases make any difference in orders from the United States?

It’s worth noting that even though Malaysia exports furniture to 198 countries, the United States remains the most attractive market. Truly, this has shown that no one can match the American consumer in terms of buying power.

Synergy House Bhd executive director Elon Teh Yee Luen says the delay has reduced near-term uncertainty and supports order continuity, although existing tariffs remain in place and continue to affect costs.

“While the delayed tariff applies to a product that is not a major part of our product line-up, we have seen improved engagement and better conversion from quotations to confirmed orders,” Teh tells StarBiz 7.

Similarly, Tan reckons orders from the United States are expected to resume, but on a short-term basis.

“The United States will remain Malaysia’s largest export market. The outlook might be more conservative simply because customers are going to be vigilant on policy changes from the White House,” he explains.

Local manufacturers feel the same.

“Manufacturers remain cautious as changes are frequent with this US administration. The constant flip-flopping has caused much uncertainty among both manufacturers and our importers as people fear the worst if a huge order has been made,” he says.

For now, he says this is an opportunity for these companies to adapt business strategies like increasing product options and delivery speed, as well as improving designs.

“Diversifying raw material sources and improving production processes through a combination of advanced technology and skilled craftsmanship are things that can enhance competitiveness,” he opines.

There is, however, one factor that could impact the sale of furniture regardless of tariffs – the willingness of US buyers themselves.

The residential property market remains constrained due to affordability but as CNBC Housing Market Survey says, there’s been a noticeable shift towards a more balanced market this year.

“Mortgage rates didn’t move much at all in the last quarter of 2025, but home prices are steadily easing. There are early signs of what could be more activity ahead,” the survey says.

Could this be enough to change buyers’ minds?

“I would still pick renting over buying, it is much cheaper than paying a mortgage in the United States. Wages cannot keep up with the prices of homes,” says Sarah Lafeyette, a middle school teacher based in Florida.

Tradeview Research senior analyst Tan Jia Hui says stock prices already reacted last year due to the soft demand and the reciprocal tariff of 19%.

She says the entire sector has been in a downtrend after the pandemic due to high interest rate, inventory overbuild and weak consumer sentiment.

“While we anticipate that lower interest rates will eventually stimulate demand, we maintain a cautious outlook. The strengthening ringgit creates a currency headwind for exporters, while rising operational costs exacerbated by furniture players absorbing higher tariff burdens will continue to squeeze margins,” she explains.

She believes if the US Federal Reserve cuts rates and unlocks the housing market, volume will return.

“Policy clarity is also important as customers and suppliers will be able to plan ahead.”

For now, Malaysian furniture players are caught between cautious optimism and lingering uncertainty – policy clarity, cost management and responsiveness to shifting demand will be key in determining whether the market can regain momentum in 2026.

It does seem that the one-year reprieve from higher tariffs isn’t going to move the needle much for local furniture players.