The Australian Furniture Association watched last night as America again voted Donald Trump into The White House. But how will this affect Australia? And the Furniture Industry? When Donald Trump returns to the White House in 2025, his administration are likely to continue its “America First” trade policies, which could have significant effects on global markets, including Australia’s.
While Trump’s previous presidency reshaped trade relations, a second term could introduce more unpredictability and policy shifts that directly influence the Australian furniture market. These changes could have far-reaching implications for Australian manufacturers, importers, and consumers. Here we explore how Trump’s potential return to power could impact tariffs, trade agreements, local manufacturing, and consumer behaviour in the Australian furniture sector.
1. Impacts of Tariffs on Australian Furniture Imports
One of Trump’s previous administration’s core trade policies was to impose tariffs on imported goods from countries like China, Mexico, and the European Union. This was part of a broader strategy to protect American industries and reduce trade imbalances. When Trump returns to office, there is the potential of his administration to reinstate or even expand these tariffs, particularly on Chinese goods, which could directly impact Australian furniture retailers and consumers.
Higher Import Prices
Australia imports much of its furniture from China, Vietnam, and Malaysia. If Trump reintroduces or escalates tariffs on Chinese and other foreign-made goods, Australian furniture businesses could face higher costs for imported products. This is especially true for mid- to low-range furniture, often from Chinese manufacturers. Australian importers would pass these increased costs on to consumers, resulting in higher retail prices for imported furniture in Australia.
With rising production costs and potentially fewer suppliers able to offer competitive pricing, Australian consumers may see an increase in prices for everyday furniture. For businesses that rely on low-cost imports, these tariff-driven price hikes could reduce profit margins, especially if they cannot adjust prices fast enough to keep up with changes in the global market.
Supply Chain Disruptions
Tariffs can also disrupt global supply chains, affecting the availability of furniture and raw materials. As a result of increased tariffs, Australian manufacturers that rely on imported components like timber, metal, or upholstery fabric could face supply shortages or delays. This could lead to longer lead times for products and reduced availability on store shelves, further driving up prices and potentially harming consumer demand. Australian furniture manufacturers may need to consider local sourcing options to mitigate potential delays and rising costs of imported components.
2. Changes to Free Trade Agreements: Australia’s Position in Global Trade
Trump’s presidency in 2025 could also lead to major changes in the way the U.S. interacts with global trade agreements, which would impact Australia’s position in the global furniture market. During his previous term, Trump withdrew the U.S. from the Trans-Pacific Partnership (TPP), a free trade agreement between Australia, Japan, and several other countries in the Asia-Pacific region. While Trump’s second term may not see the U.S. rejoining TPP, his administration’s approach to trade agreements will still affect Australia’s access to U.S. markets, as well as the broader international trade landscape.
Trade Barriers with the U.S.
If Trump’s administration continues to prioritise protectionism, Australian furniture manufacturers and retailers may face more barriers to exporting goods to the U.S., which is one of Australia’s key export markets. Australia currently enjoys tariff-free access to the U.S. under the Australia-United States Free Trade Agreement (AUSFTA), but that arrangement could be at risk if Trump seeks to renegotiate it in favour of American manufacturers. Stricter regulations and tariffs on Australian exports could reduce demand for Australian-made furniture in the U.S., forcing local manufacturers to look for alternative markets or focus on domestic consumption.
In the event of more stringent trade policies between the U.S. and Australia, Australian manufacturers may be pushed to diversify their supply chains and sales markets. This could mean focusing more on emerging markets in Southeast Asia, India, or Europe to offset the impact of a potential decline in U.S. demand.
New Trade Deals and Alliances
On the other hand, the Trump administration may seek to establish new trade deals or shift priorities in existing agreements. Australia could see opportunities to form stronger trade relationships with other countries if Trump pursues less conventional alliances in his second term. For example, closer ties with countries outside of traditional Western markets—such as in Africa, India, or parts of Latin America—could open new doors for Australian furniture manufacturers, giving them alternative avenues for growth as U.S. trade policies evolve.
3. Manufacturing Shifts: The Case for Domestic Production in Australia
Trump’s “America First” policy during his first term was heavily focused on revitalising American manufacturing, including the furniture industry. When he returns to power, it is likely that he will continue to push for policies that incentivise domestic production in the U.S., such as subsidies, tax breaks, and tariffs aimed at discouraging imports.
For Australia, this could present both challenges and opportunities. On one hand, Australian manufacturers could face increased competition from U.S. companies that are more aggressively supported by the federal government. If U.S. manufacturers ramp up domestic production and reduce their reliance on imports, they could undercut Australian exports, particularly in the budget and mid-range furniture sectors.
However, there could also be a silver lining for the Australian furniture industry in the long run. With the potential for increased costs and tariffs on overseas goods, Australian furniture manufacturers may be encouraged to ramp up domestic production to cater to both local and international demand. The high costs associated with imported goods may prompt local producers to focus more on high-quality, locally-made furniture, which could become a key selling point for Australian businesses competing in the global market.
Innovation and Sustainability
As trade barriers rise, Australian manufacturers may increasingly turn to innovation and sustainability to remain competitive. There’s a growing trend among consumers, especially in Australia, toward environmentally conscious and ethically produced furniture. Australian manufacturers that adopt sustainable practices—such as using recycled materials, reducing waste in production, or offering more durable, long-lasting products—could gain a competitive edge in both local and global markets. The AFA’s Digital Product Passport System (DPPS) will support this shift by providing transparency across the product lifecycle, allowing businesses and consumers to make informed, responsible choices that reinforce sustainability.
4. Consumer Behaviour: Price Sensitivity and Demand for Local Goods
Australian consumers are likely to feel the brunt of any tariff-related price hikes, which could lead to changes in buying behaviour. Historically, Australian furniture buyers have had access to a wide range of affordable imported goods, particularly from China and Southeast Asia. However, with the potential for rising prices due to tariffs and trade disruptions, consumers may start to look for alternative options.
Shift Toward Local Products
In response to higher prices on imported goods, Australian consumers might increasingly favour locally made furniture. The “buy local” movement has gained significant traction in Australia, and if domestic production becomes more price-competitive relative to imported options, we could see a shift toward locally manufactured furniture.
Moreover, consumers who are willing to pay a premium may gravitate toward higher-end, locally made pieces that emphasise quality, sustainability, and craftsmanship. Brands that can effectively market themselves as environmentally responsible or locally produced could tap into a growing demand for ethical consumerism.
Price Sensitivity
On the other hand, as tariffs and global price hikes increase, Australian consumers—who are already facing cost-of-living pressures—may become more price-sensitive. This could lead to a rise in demand for budget-friendly options, including second-hand or recycled furniture. Retailers that cater to this market segment may see an uptick in sales, particularly if they can provide value-oriented pricing while still maintaining product quality.
Conclusion
As Donald Trump returns to office in 2025, the Australian furniture market is likely to face a complex and evolving set of challenges and opportunities. Increased tariffs, shifting free trade agreements, and changing consumer behaviours will all play key roles in shaping the future of the sector. While Australian businesses may face higher import costs and potential disruptions in supply chains, there is also an opportunity for local manufacturers to capitalise on the growing demand for locally made, sustainable furniture.
Ultimately, businesses must remain adaptable and responsive to the shifting global trade environment, leveraging innovation and sustainability as key differentiators in an increasingly competitive market. For consumers, the landscape will shift toward a more complex array of pricing options, with both challenges and opportunities emerging in terms of affordability, availability, and quality.
Co-Authors: Rachael Forrester (AFA) & Michelle Thomas (AFISC)