Will IKEA survive the Trump Administration’s tariffs… I mean IKEA basically imports everything and the Trump Administration has suggested numerous tariff levels that are all ruinous to any business that relies on imports. Which of course is exactly the Trump Administration’s idea.
The Trump Administration wants to encourage domestic manufacturing and level the playing field with other countries when it comes to tariffs. Donald Trump is also reportedly obsessed with the trade deficit and believes the United States should always have a trade surplus. Something along those lines.
Ikea has over 1300 suppliers in 52 countries. 52. That’s crazy and it means anything imported to the United States will undoubtedly get hit with a tariff. There’s just too many countries in play, at least one of them will trigger a tariff. Even if the product ends up being finished and labeled as a “friendly” nation’s product it won’t matter! Because the Trump Administration wants to raise tariffs across the board, friendly nations like Mexico and Canada included. And to add to that something like 70% of IKEA’s products come from Europe and let’s face facts… Trump is not Europe’s biggest fan.
In the United States IKEA imports 90% of its products and China makes up a significant portion of that 90%. Of course the Trump Administration has suggested a 60% tariff on Chinese products. We have no idea to what the tariff would be or how that tariff would be applied but the fact that they’re even talking of a number that high is bad news for everyone. Even if it’s a negotiating tactic and the Trump Administration settles for a blanket 25% China tariff it’ll still be devastating to companies, people, and the economy as a whole.
However, it might not matter to IKEA as much as you would think. Only about 14% of IKEA’s revenue comes from the United States. IKEA is truly global and has stores in SIXTY THREE countries. A tariff war between the United States and the rest of the world would not leave IKEA unscathed, but it’s in a much better position than say Hobby Lobby which is entirely dependent on Chinese imports and operates inside the United States.
There’s no way IKEA is at risk of bankruptcy like other companies that depend on China are because of the Trump Administration’s tariffs. IKEA had revenue of EUR 47 billion in 2023 and like I said only about 14% of that comes from the United States. IKEA is actually somewhat insulated from a trade war. They can always dismiss the United States market for what it is and focus on expanding in countries that are not engaging in an asinine trade war.
To review, a significant portion of product sold in the United States comes from China. Europe is a major supplier for a lot of IKEA’s products despite that. IKEA has a diversified business geographically speaking. Not every country will engage in the Trump Administration’s trade war so trade that doesn’t include the United States may end up being “normal”, benefiting IKEA. IKEA has revenue of EUR 47 billion and only about 14% is from the United States. IKEA is in an okay position overall.
So don’t worry about IKEA, we’ve got bigger problems coming up.
All statements regarding IKEA are a matter of opinion. Only IKEA should be relied upon for factual data regarding their financial health.