The iconic Swedish flat-pack furniture giant IKEA, renowned for its minimalist Scandinavian design, is embarking on a significant strategic shift with a distinctly American flavour. The driving force behind this change is the economic policy of former President Donald Trump, whose tariffs have made importing materials prohibitively expensive.
The Tariff-Driven Pivot to Local Production
Faced with skyrocketing costs for imported materials, Inter IKEA, the brand's franchisor, is actively seeking to source more of its products within the United States. Susanne Waidzunas, Inter IKEA's global supply manager, explained to Reuters that the company is redesigning its supply network to be "much more resilient, robust, and responsive." This move directly counters the brand's traditional reliance on long, transoceanic shipping routes for its stores across the Americas.
"The closer we can build, the faster we can react from a supply perspective," Waidzunas stated, highlighting the need for agility in responding to both surges and dips in consumer demand. This localisation strategy is crucial for supporting IKEA's expansion plans in the US, its second-largest global market, and in other American nations like Canada, Mexico, Chile, and Colombia.
By the Numbers: IKEA's Global Manufacturing Footprint
The scale of the challenge is clear in the data. Currently, only 15 percent of the products sold in IKEA's US stores are manufactured domestically, a figure that has actually fallen from 19 percent in 2014. This stands in stark contrast to the company's operations in Europe and Asia, where 70 percent and 80 percent of sold products are made locally, respectively.
The tariffs have hit IKEA's key sourcing countries hard. Its top suppliers include China, Germany, Italy, Lithuania, and Poland—all nations subject to Trump's import taxes. While producing in the US is more expensive, Waidzunas notes that the combined cost and unpredictability of global shipping have increased dramatically since the COVID-19 pandemic, making local production a more viable long-term calculation.
A Wider Trend: American Retailers Investing at Home
IKEA is not alone in this strategic realignment. With high tariffs applied to imports from numerous countries, particularly China and India, major US corporations are looking closer to home. Retail behemoth Walmart has publicly increased its investments in American-made goods and suppliers.
Walmart's CEO, John Furner, emphasised that investing in US manufacturing is "great for business" and "great for jobs." He stated that nearly two-thirds of Walmart's inventory is already made, grown, or assembled domestically, with plans to grow that number. Initiatives like a new beef processing facility in Kansas, creating over 600 jobs, underscore this commitment.
For IKEA, this shift represents a reversal from recent history. The company previously operated a factory in Danville, Virginia, but closed it in 2019, moving production back to Europe. Now, the new economic and logistical landscape is compelling the Swedish giant to rebuild its American manufacturing base, signalling a new chapter where its sleek designs may increasingly come with a "Made in the USA" label.
