Ikea is increasing the amount of products it makes in the US as the world’s largest home furnishings retailer comes under pressure from US President Donald Trump’s tariffs on furniture and kitchen cabinets.
The flat-pack retailer, which made revenues of $5.5bn in the US last year, currently produces only about 15 per cent of products that it sells in the US domestically. That compares with 75 per cent local production in Europe and 80 per cent in Asia.
“We want to continue to expand in the US and Canada — how do we optimise a good supply set-up where we secure the right access to materials, to components, to production? That’s very long-term work that we’re doing,” Jon Abrahamsson Ring, chief executive of Inter Ikea, the owner of the brand, told the Financial Times.
Trump imposed tariffs of between 10 and 50 per cent on imports of foreign furniture and wood products this week. Ikea, which is responsible for about 1 per cent of total industrial production, is set to take a significant hit.
Jesper Brodin, chief executive of Ingka, which operates 90 per cent of Ikea’s 487 stores, noted that in 2023 the group had committed to invest $2.2bn in both new stores and production facilities in the US.
“We will continue to look for ways to add new customer points, and expand sourcing and fulfilment in North America, including in the US,” he said in a separate interview.
Ring said that because Ikea imports most of its US products from Europe he was “cautiously optimistic” that the 15 per cent tariffs the US broadly applied to EU exports would apply, rather than Trump’s more punitive tariffs on wood products.
Most of Ikea’s competitors import from Asia, which is generally subject to higher rates.
The executives’ comments on tariffs came as Ikea reported a 1 per cent drop in annual revenues to €44.6bn in the year to the end of August.
It blamed the decline on price cuts it made in 2024 after a period of high inflation, and said that both sales volumes and customer visits had increased by 3 per cent last year.
Ikea is expanding in the Americas, opening in new countries such as Costa Rica and Panama, as well as opening new stores in the US, including a new outlet in the SoHo district of Manhattan.
The Swedish retailer is also opening so-called kitchen planning studios in 10 Best Buy stores this year, as part of an effort to build a presence in smaller US cities.
Ikea also announced it is testing a new type of shop — named Lada — in smaller towns. The stores will open in pre-existing retail units to lower costs and will be a more conventional, low-frills shopping experience than Ikea’s showrooms.
The pilot includes three stores in the UK — in Norwich, Chester and Harlow — as well as one each in Poland and the US.
Tolga Öncü, Ingka’s retail manager, said the group would decide at the end of the year whether to expand the new format in more locations.
It has stripped the stores back including by taking out much of the visual presentation of products, but still guaranteed customers that they could receive any product not in store within 24-48 hours, Öncü added.
Ikea has tested numerous smaller formats — especially in city centres, closer to where its customers live and work — as it shifts away from its heavy reliance on huge out-of-town stores.
