^{RH CEO Gary Friedman said on the call that the company sources a significant amount of products from Asian countries. (Rachel Murray/Getty Images for RH / Getty Images)}

‍April 4, 2025 — New York, NY — During a live quarterly earnings call on Wednesday, Gary Friedman, the CEO of luxury home furnishings retailer RH, was caught off guard as his company’s stock price took a sharp 25% dive. The dramatic fall occurred just as President Donald Trump revealed his new tariff plans, which are expected to hit a range of industries, including home furnishings.

A Sudden Hit to Stock Price

As the earnings call unfolded, Friedman was discussing the company’s latest performance, which included lower-than-expected earnings. The CEO detailed how RH, formerly known as Restoration Hardware, had struggled to meet analyst expectations, when suddenly, news about the tariff measures triggered a sharp market reaction.

“Oh, really? Oh, s---. OK,” Friedman said, visibly reacting to the real-time drop in stock price. "I just looked at the screen. I hadn’t looked at it. It got hit when I think the tariffs came out."

This unexpected moment highlighted how the home furnishings sector is particularly vulnerable to President Trump’s tariff plans, which could have severe economic implications for companies reliant on global supply chains. RH, known for its high-end furniture, imports many of its products from China and other overseas suppliers, leaving it exposed to import duties imposed by the U.S. government.

The Impact of Tariffs on RH’s Bottom Line

RH’s stock has been hit hard by the new tariff proposals, especially as the company openly acknowledges its global sourcing practices. In his remarks, Friedman pointed out that RH's supply chain isn’t a secret to anyone who closely follows the company’s 10-K filings, which reveal detailed information about where their products are sourced from.

“Everybody can see in our 10-K where we’re sourcing from, so it’s not a secret, and we’re not trying to disguise it by putting everything in an Asia bucket,” Friedman added.

The tariff plans are expected to have widespread consequences on the home furnishings industry, which relies heavily on imports from countries like China, Vietnam, and Mexico. If these tariffs are enforced, companies like RH could face higher costs for raw materials and products, which may force them to either absorb those costs or pass them on to consumers.

According to Trade Data Monitor, the U.S. home furnishings industry imports nearly $45 billion worth of goods annually, with China accounting for about 40% of those imports. This has placed significant pressure on companies that are struggling to navigate the increased duties and trade uncertainty created by President Trump’s tariff policies.

Stock Market Reaction: A Broader Trend

The stock market’s reaction to Trump’s tariff announcement is part of a broader trend where global trade tensions and uncertainty have made investors uneasy. Markets have seen wild swings in response to trade news, especially when large consumer-facing companies like RH report potential financial strain due to tariffs.

Friedman’s candid reaction on the call underscores the vulnerability of companies in industries reliant on global trade networks. As investors monitor the tariff fallout, it’s clear that industries such as home furnishings, electronics, and automobiles will be at the forefront of the trade war’s effects.

For RH, the drop in stock price represents a short-term challenge, but the long-term effects could be even more significant. With the global economy already under pressure from the pandemic recovery, the introduction of new tariffs could slow consumer spending and increase costs for companies that depend on imported goods.

What’s Next for RH and Other Home Furnishing Companies?

While RH’s quarterly earnings disappointed investors, the company is not alone in facing the consequences of rising tariffs. Many of its competitors, including companies like Wayfair and IKEA, are also grappling with the fallout from trade tensions.

Industry analysts have predicted that the impact of tariffs could push prices higher for consumers and possibly reduce demand for big-ticket items like luxury furniture. Additionally, companies may need to reevaluate their supply chains, potentially seeking to diversify production or relocate manufacturing to countries with lower tariffs or more favorable trade relations.

However, there is some optimism. As Friedman pointed out, RH has historically been a company that thrives on adaptation and innovation, and it may ultimately find ways to weather the storm. Whether through strategic price adjustments, new partnerships, or sourcing changes, the company will likely continue its efforts to navigate the turbulent trade landscape.

The Tariff Effect on the Future of U.S. Business

The unfolding trade situation under the Trump administration has thrown many U.S. businesses into turmoil, especially those heavily reliant on international supply chains. As RH CEO Gary Friedman’s reaction on the earnings call shows, the immediate effects of tariffs can be sharp and difficult to predict.

With new tariffs set to disrupt industries ranging from furnishings to electronics, the global business environment remains uncertain. For companies like RH, how they adapt to the shifting trade landscape will determine whether they can overcome the financial headwinds brought on by this latest round of trade policy changes.

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