Shares of Restoration Hardware (RH) plummeted 5.10% in Tuesday's trading session as investors reacted to concerns about the potential impact of 2025 tariffs on the home furnishing industry. The luxury furniture retailer, known for its high-end products, is facing heightened uncertainty due to its significant sourcing from Vietnam and Southeast Asia.

According to a note from BofA Securities, the 2025 tariffs represent a more severe disruption than the 2018 round. Past mitigation efforts, such as shifting supply chains and raising prices, are becoming less viable for companies like RH. The firm highlighted that RH is particularly vulnerable to these tariffs due to its major sourcing from Vietnam and Southeast Asia.

The situation is further complicated by weak consumer sentiment and a soft housing market. Historically, higher home furnishing prices correlate with lower volumes, suggesting that any price hikes in 2025 could be particularly damaging to RH's business. As the company grapples with these challenges, investors appear to be pricing in the potential negative impact on RH's future performance, leading to today's significant stock decline.