Will IKEA go bankrupt because of the Trump Administration’s 100% tariffs? The short answer is no, probably not. With proposed tariffs of 20% or 60% or 100% being thrown about the bankruptcies of retailers that depend on imports is a very real possibility.
The longer answer is no it probably won’t go bankrupt for a couple of reasons…
The first reason is that only about 14% of all of IKEA’s revenue comes from the United States. That’s small enough that you should be able to take ALL of that revenue away and the company should be able to survive. So the Trump Administration could tariff IKEA into oblivion and it still should survive.
The second reason is that IKEA is truly a global company. IKEA has stores in SIXTY THREE countries around the world. 63. That’s very impressive. It also has suppliers in FIFTY TWO countries. So no matter what tariffs the United States puts up, IKEA should be able to maintain some normal trade between its stores and suppliers. The United States just isn’t in volved as much as other mainly European countries are.
Another reason IKEA will survive is that the tariffs they experience, even while the headline rate says 100%, may not be 100%. What gets a tariffs and what doesn’t, and why it get a tariff or doesn’t, are complex matters left to the government employees who do this every day. But just because Donald Trump says 100%, that doesn’t mean every product in IKEA is going to be 100% more expensive.
90% of the product IKEA sells in the United States is of foreign origin and 10% is domestic. So that’s not good tariff wise since the Trump Administration basically wants to raise tariffs on the whole world. But the tariffs will vary with Chinese products getting supposedly a 60% rate and Europe probably getting less at 20%. Trade agreements may even stop the Trump Administrations from raising tariffs rates too much. If he doesn’t rip them up and have a compliant Congress approve of course.
And IKEA does have EUR 47 Billion in revenues. That alone should mean it has the cash to handle a tariff situation at its United States based stores.
So IKEA is in a relatively good situation compared to say Hobby Lobby.
Regardless, the Trump Administration’s tariffs will hurt IKEA. They will hurt a wide range of businesses. They will hurt everybody. And the Trump Administration does not care. They have said this pain is necessary. Which is easy for them to say, they’re billionaires. But at the end of the day the stores you enjoy are under threat and your grocery bill is going to skyrocket.
Always remember, countries don’t pay tariffs, the consumer ultimately does.
Any forward looking statements are a matter of opinion. Only IKEA truly knows their financial state and only IKEA should be relied on for factual data regarding their financial health. All statements are opinion.