The tariffs proposed by President-elect Donald Trump will make it more difficult for IKEA to keep prices low, the CFO of the world’s largest furniture retailer told Reuters on Wednesday.
It is worth noting that Trump has pledged significant tariffs on imports from the United States’ top three trading partners—Canada, Mexico, and China—raising concerns among governments and businesses that rely on smooth global trade for their supply chains.
Experts have pointed out that such measures could have severe economic consequences. According to the Tax Foundation, these tariffs could raise taxes on American consumers by $525 billion annually and reduce GDP by 0.8 percentage points, leading to the loss of 684,000 jobs in the U.S. Furthermore, these measures are expected to increase the cost of essential goods, disproportionately affecting middle- and lower-income households.
IKEA’s Perspective on Trump Tariffs
In a broader outlook, the tariffs proposed by Donald Trump are expected to challenge IKEA’s ability to maintain affordable prices.
According to a report by Reuters, the CFO of Ingka Group, Juvencio Maeztu, mentioned that about 30% of IKEA’s products come from Asian countries, including China, while 70% are sourced from Europe. Maeztu added that IKEA is “closely monitoring” developments regarding tariffs.
Data from the brand reveals that the United States is IKEA’s second-largest market globally, accounting for 13.2% of sales in its fiscal year 2024.
“For us, trade barriers worldwide, whether from one country or another, limit the possibilities of making things more affordable for many people,” said Maeztu.
“We will continue working with governments and our supply chain to try to mitigate the impact and ensure affordability,” he added.
Notably, IKEA has reduced its prices in 2024, offering shelves at $69 and sofas at $299, which attracted more customers but resulted in a drop in revenue and profits.
When asked about the potential for Trump’s administration to impose tariffs on European products, Maeztu stated that it’s best not to speculate but confirmed they will remain vigilant in the coming months.
Impact on Other Major Companies
This scenario is also affecting other major companies in the U.S. For instance, Walmart’s CFO, John David Rainey, recently warned that the retailer might be forced to raise prices on certain products if Trump’s proposed tariffs are implemented.
“We never want to increase prices. Our model is based on everyday low prices. But there are likely to be cases where prices rise for consumers,” Rainey said in an interview with CNBC.
Similarly, Lowe’s CEO, Marvin Ellison, noted that the company is in discussions with suppliers to understand how tariffs might impact prices.
AutoZone’s CEO, Philip Daniele, also anticipates that tariffs could force the company to pass these costs onto consumers. He even mentioned the possibility of raising prices before the tariffs take effect.
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