IKEA Navigates Trade Barriers with Strategic Supply Chain Insights

IKEA has adapted its supply chain to better withstand potential trade barriers highlighted by Donald Trump's tariff threats. Inter IKEA, responsible for production and franchising, is preparing for U.S. tariffs, with only 10% of its American products made domestically. Despite supply challenges, IKEA's profits increased due to reduced interest costs.

Amid global trade tensions, IKEA has taken significant strides to shield its operations from potential trade barriers. The furniture giant's strategic adaptations come as companies brace for the tariff-centric policies under Donald Trump's presidency. Inter IKEA, which oversees production and franchises, has made supply chain responsiveness a priority.

With the U.S. market relying heavily on imports, IKEA's largest franchisee, Ingka Group, has invested 2 billion euros to bolster its American presence. A possible 10% tariff on all imports and up to 60% on Chinese imports pose challenges, particularly as only 10% of IKEA's U.S. offerings are made domestically.

IKEA's global sourcing strategy sees most of its products in Europe and China made locally. Despite an 8.9% revenue drop, the company saw higher profits due to cost-effective price cuts and increased customer purchases of lower-priced goods. Key sourcing countries include Poland, China, and Germany.

(With inputs from agencies.)