Shifting Strategies as Consumer Uncertainty, Smaller Margins, and Rising Costs Pose Challenges
By NKBA Editorial Staff
As the federal government’s tariff policies continue to evolve, we are learning more about how this major disruptor to international trade dynamics is affecting the kitchen and bath industry.
Here are four takeaways from the 3Q25 KBMI Report about the impact tariffs are having on the K&B industry right now:
Uncertainty and Instability
A prolonged period of consumer uncertainty, fueled by economic factors including inflation and high borrowing rates, is now being reinforced by the influence of tariffs. Project cancellations and postponements stayed elevated in 3Q25, while many homeowners scaled back project size or downgraded materials and finishes to reduce the cost of their remodels. Design firms saw project completions decline 5.7% YOY, marking the third straight quarter of negative growth. Consumer uncertainty remains a top constraint on near-term growth in the K&B market.
Margins: Under Pressure
The manufacturing sector reported that tariffs had a particularly strong impact on margins. Seven in ten respondents said tariffs implemented in the last six months put pressure on their margins. While about one in five (18%) reported they were able to fully pass tariff-related cost increases, slightly more (19%) said they were having to absorb higher costs entirely.
Heightened Cost Anxiety, Higher Prices
K&B firms increased the prices they charge for products and services by an average of 4.6% YOY during the last quarter. Suppliers raised product prices to K&B retailers by 6.1% YOY in 3Q25, up from 4.6% in 2Q25, with the steepest increases reported for lighting and vanities. Despite these price hikes, 28% of industry firms reported lower gross margins YOY; 55% were flat; and 17% saw a gain. This is the highest share of margin declines in the survey’s history, going back to 2022.
However, there are anecdotal signs that U.S.-based manufacturers and products are benefitting from tariff policies. As one cabinet shop in California noted, “the impact of tariffs just recently started to show up in some of our material acquisition costs. We have been fairly insulated as the majority of the products we purchase are made or assembled in the USA.”
Shifting Business Strategies
Companies of all sizes report adjusting their strategies in response to tariffs, including changing suppliers and updating sales processes.
“Tariffs and consumer uncertainty are undoubtedly linked, and together they form a real barrier to growth for the majority of businesses in our industry,” said Bill Darcy, Global CEO and President, NKBA I KBIS. “While sentiment among K&B pros about the industry’s economic health dropped to its lowest point since 2020 in 3Q, it is still in the ‘normal’ growth range. The outlook for 4Q is cautiously neutral as businesses anticipate some improvement in consumer confidence, and mid-single-digit growth for 2026 still seems likely.”
Read the full 3Q25 KBMI report for additional insights about tariffs and other pressures that are impacting the kitchen & bath industry.
