Ikea raises prices as Trump's furniture tariffs hit retailer

Swedish retailer Ikea, known for its low-cost business model, is raising prices due to a new round of tariffs impacting the furniture business. Tolga Öncü, retail manager at Ingka, which operates most Ikea stores around the world, told The Wall Street Journal that the company has had to adapt to the new business environment which means passing on "part of the cost increase to the customers." "We can’t stay immune to absorb all the costs ourselves," he told the outlet. "But the big work sits in finding ways to lower the prices."While Öncü said the company's ambition to lower costs, he acknowledged that it's become very difficult, even impossible, at some point to do so in the current business environment. INTER IKEA CEO SEES TURNAROUND IN HOUSINGPresident Donald Trump announced last month that the administration would impose tariffs on imports of timber, lumber and their derivative products (wood products) to bolster American industry and protect national security that would take effect on Oct. 14. A 10% tariff was imposed on softwood lumber imports, while a 25% tariff was imposed on imported upholstered furniture as well as kitchen cabinets and bathroom vanities. By Jan. 1, tariffs on furniture will rise to 30%, and those on cabinets/vanities will spike to 50%, unless exporting countries negotiate relief.FOX Business reached out to Ikea for comment. IKEA PLANS MORE US PRICE CUTS AS TRANSPORTATION, MATERIALS COSTS EASEThe company is exposed to U.S. tariffs because it relies heavily on imports. Inter Ikea Group said in a 2024 report that the majority of Ikea products, approximately 90%, are sourced from external suppliers across the globe. IKEA ANNOUNCES $2.2B US INVESTMENT, 17 NEW STORESIn order to keep prices steady, the company has focused on cutting operational costs, Öncü told the Journal. However, some categories have already been impacted by the higher costs. For instance, certain sofas saw a nearly $50 increase while bedroom sets rose nearly $100 in recent months. GET FOX BUSINESS ON THE GO BY CLICKING HEREMeanwhile, the company has been increasing efforts to produce more products domestically. It already sources all its kitchen cabinets for the U.S. market domestically and is looking at sourcing additional products, like mattresses, from local suppliers as well, according to Öncü. The news is an about-face from March 2024 when the company announced that it was going to continue to cut prices in the U.S. as inflationary pressures ease. The company has been cutting prices on hundreds of products across several countries throughout 2024 as the cost of transportation and raw materials eased. Companies that may have found relief from years of persistent high inflation are now trying to circumvent the impact of tariffs on their business. Weiter zum vollständigen Artikel bei FOX Business Weiter zum vollständigen Artikel bei FOX Business