Shares of RH, Restoration Hardware’s parent company, saw a dramatic drop of 40% on April 3, 2025, following the announcement of new tariffs under President Donald Trump’s administration. The hefty decline represents the sharpest drop in RH’s stock price in nearly five years, and investors are scrambling to understand the potential long-term effects of these new trade policies.
The new tariffs target imports from countries such as China, Vietnam, South Korea, and members of the European Union. Goods from China, for example, now face tariffs as high as 54%, while Vietnamese imports are being taxed at 46%. These tariffs come at a time when RH, a company that sources the majority of its products from Asia, is heavily reliant on these regions for manufacturing.
The Impact on RH and Its Global Supply Chain
RH sources about 72% of its products from Asia, including 35% from Vietnam and 23% from China. The recent tariff announcement has sparked concerns about increased production costs, potentially squeezing the company’s profit margins and disrupting its supply chain. As the tariffs take hold, RH may face challenges in maintaining competitive pricing and ensuring its inventory is delivered on time.
Gary Friedman, the CEO of RH, expressed surprise during the company’s earnings call about the sharp drop in stock price. He attributed much of the decline to the uncertainty surrounding the tariffs. While Friedman praised the Trump administration’s trade strategies, he emphasized the need for more clarity to help businesses make informed decisions.
Analysts Weigh In on the Future of RH
Market analysts are now raising red flags about RH’s vulnerability to tariff-induced risks. Seth Sigman, an analyst at Barclays, noted that these tariffs introduce significant uncertainty, which could impact the company’s ability to recover both in sales and margins.
To address these issues, RH has announced plans to shift some of its sourcing operations from China to Mexico. This strategic move is designed to help mitigate some of the risks associated with the new tariffs and reduce the pressure on the company’s bottom line.
Wider Market Effects
The effects of the tariffs are being felt across various sectors, not just within the furniture industry. Other companies that rely on Asian supply chains have also seen significant drops in stock prices. For example, Wayfair’s stock fell by 22%, and major tech giants like Apple and Nvidia experienced similar declines. The broader market’s response signals a growing concern over the broader economic consequences of the tariff increase.
What’s Next for RH?
As RH and other companies with significant exposure to Asia grapple with these new tariff challenges, investors and analysts will be closely monitoring how the situation develops. The company’s ability to adjust its supply chain strategy and navigate these turbulent waters will determine how well it can recover in the coming months.
