IKEA has raised concerns that the tariffs proposed by President-elect Donald Trump could make it difficult for the company to maintain its low pricing strategy. According to Ingka Group CFO Juvencio Maeztu, the planned tariffs, which target the U.S.'s key trade partners including China, Canada, and Mexico, could disrupt IKEA's supply chain and increase costs. This could challenge the retailer's goal of providing affordable furniture.
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Approximately 30% of IKEA's products are sourced from Asian countries, including China, while the remaining 70% come from Europe. With the U.S. being IKEA's second-largest market, accounting for 13.2% of its sales in 2024, the company is closely monitoring the situation. Maeztu noted that trade barriers could limit the company's ability to keep prices low for consumers, which is central to IKEA's mission.
In response, IKEA is actively engaging with governments and supply chain partners to mitigate the impact of the tariffs and maintain affordability. Despite challenges, IKEA remains committed to working on solutions to avoid significant price hikes.
In 2024, IKEA reduced prices on many products to attract more customers, but this led to a decrease in revenues and profits. Nonetheless, the company continues to prioritize making furniture affordable for a wide range of people, while navigating the complexities of global trade.
Source: www.nypost.com