Ikea passes tariff costs to customers with higher furniture prices

Swedish retailer Ikea, known for its low-cost business model, has raised prices due to a new round of tariffs affecting the furniture trade.

Tolga Onjo, retail director at Ingka, which operates most of IKEA’s stores around the world, told the Wall Street Journal that the company had to adapt to the new business environment, which meant passing on “part of the cost increase to customers.”

“We cannot remain immune to absorb all the costs ourselves,” he told the outlet. “But the big job is to find ways to bring prices down.”

While Onjo said the company’s ambition was to cut costs, he acknowledged that it had become difficult, or even impossible, to do so in the current business environment.

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President Donald Trump announced last month that the administration would impose tariffs on imports of lumber, lumber and its derivative products (wood products) to support American industry and protect national security, which will take effect on October 14.

A 10% tariff was imposed on imports of softwood, while a 25% tariff was imposed on imported upholstered furniture as well as kitchen cabinets and bathroom sinks. By January 1, tariffs on furniture will rise to 30%, and tariffs on cabinets/sinks will rise to 50% unless exporting countries negotiate relief.

FOX Business has reached out to Ikea for comment.

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The company is exposed to US tariffs because it relies heavily on imports. The majority of Ikea products, about 90%, are sourced from third-party suppliers around the world, the Inter Ikea Group said in a 2024 report.

The company is exposed to US tariffs because it relies heavily on imports. (Justin Sullivan/Getty Images/Getty Images)

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Onjo told the newspaper that in order to maintain price stability, the company focused on reducing operational costs. However, some categories have already been affected by rising costs. For example, the cost of some sofas has risen by about $50, while the cost of bedroom sets has risen by about $100 in recent months.

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At the same time, the company is increasing efforts to produce more products locally. It already sources all of its kitchen cabinets for the US market locally and is looking to source additional products, such as mattresses, from local suppliers, according to Onco.

In order to maintain price stability, the company focused on reducing operating costs. (Justin Sullivan/Getty Images/Getty Images)

This news is a sea change from what happened in March 2024, when the company announced that it would continue to cut prices in the US as inflationary pressures eased.

The company has reduced prices for hundreds of products in several countries throughout 2024 Transportation cost The raw materials are softened.

Companies that may have found relief from years of persistent high inflation are now trying to circumvent the impact of tariffs on their businesses.