As U.S. President Donald Trump signaled tariffs on imported furniture products, the math has grown complicated for ZINUS, a Korean furniture maker with a high share of exports to the United States. Among the furniture items produced by ZINUS, a subsidiary of Hyundai Department Store, bed frames have for now been excluded from the tariff list, but sofas are confirmed to face a 25% tariff.
ZINUS expects the immediate impact to be limited because sofas account for a small share of its sales. However, uncertainty remains as the U.S. administration has left open the possibility of expanding tariff coverage to all furniture.
According to the White House on the 29th (local time), President Trump signed a proclamation that imposes a 10% tariff on imported logs and lumber, and a 25% tariff on wood-based furniture such as sofas. The tariff takes effect starting Sept. 14 and will rise to as high as 50% from Jan. 1 next year.
Before announcing the tariffs, Trump wrote on the social media platform Truth Social that he would "impose significant tariffs on all countries that do not make furniture in America to make North Carolina great again, which has had its furniture industry completely taken away by China and other countries."
The announcement has complicated the calculus for ZINUS. In the first half of this year, exports to the United States accounted for 77.2% (370.1 billion won) of ZINUS' sales. ZINUS' business is divided into the mattress segment and the non-mattress segment, which makes bed frames, sofas, and other items. In the first half of this year, ZINUS' mattress segment sales were 367.4 billion won, and non-mattress segment sales were 106.7 billion won.
To expand its non-mattress business, ZINUS built a new plant in Cambodia and began operations last month. Previously, it produced non-mattress products only in China, but after Trump's return to power late last year, it feared higher tariffs on Chinese products and in January of this year established a subsidiary in Cambodia and began constructing a plant.
ZINUS planned to minimize tariff impacts by exporting non-mattress products made in China to countries other than the United States, and products made in Cambodia to the United States. In the first U.S. reciprocal tariff proposal in April, Cambodia was assigned a high tariff of 49%, but the rate was reduced to 19% through a trade agreement with the United States.
ZINUS is seen as having gained some breathing room for now with the U.S. administration's furniture tariff announcement. Its flagship non-mattress product, bed frames, has for the moment not been included in the tariff list. Although tariffs on sofas have been finalized, sofas account for about 1% of ZINUS' sales.
However, the U.S. administration appears to be moving to gradually include the broader furniture category in the tariff list, so it is not a situation where the company can rest easy. The White House release explicitly noted in a separate annotation that "furniture not included in this proclamation may be subject to tariffs in the future."
ZINUS posted sales of 479.4 billion won and operating profit of 56.6 billion won in the first half of this year. Sales rose 33.7% from a year earlier, and the company swung to a profit. The increase reflects higher U.S. sales and the reversal of provisions recognized after ZINUS won a lawsuit to invalidate an anti-dumping petition filed by U.S. mattress manufacturers.
Still, the securities market expects ZINUS' earnings in the second half of this year to be somewhat sluggish. Nam Seong-hyeon, an analyst at IBK Securities, said, "ZINUS, a subsidiary of Hyundai Department Store, is likely to see a lower contribution to consolidated earnings through the first half of next year due to the impact of tariff imposition, among other factors." Hyundai Department Store acquired ZINUS in 2022 by investing a total of 879 billion won and currently holds a 38% equity stake.
Meanwhile, domestic furniture companies other than ZINUS are expected to be relatively free from the impact of high U.S. tariffs. HANSSEM, the No. 1 player in Korea's furniture industry, generated 99% of its total sales from the domestic market last year. Hyundai LIVART also has a small share of exports in its total sales, and most of its exports are conducted in a B2B (business-to-business) format.
A ZINUS official said, "We have already relocated the non-mattress segment's plant to Cambodia, and the sofa share is extremely low, so we do not expect a large tariff impact," adding, "We are watching how things develop."