The chief executive of the company behind Ikea furniture stores says tariffs make it more difficult to keep its prices low, joining a growing chorus of business leaders in warning of a potential hit to people’s wallets from Donald Trump’s planned import levies.
“In general, we don’t believe tariffs will support international companies and international trade. At the end of the day, that risks ending up on the bills of customers,” Jesper Brodin, Ingka Group CEO, told CNN Wednesday when asked about Trump’s tariffs. He was speaking ahead of the opening of Ikea’s pop-up store on London’s Oxford Street Thursday.
“Tariffs make it more difficult for us to maintain the low prices and be affordable for many people, which in the end is our goal,” he added. “We have never experienced a period of benefit when we had high tariffs,” he said, referring both to Ikea and the global economy. “But it’s beyond our control. We will need to understand and adapt.”
On Monday, President-elect Trump promised massive hikes in tariffs on goods coming from Mexico, Canada and China. In response, officials from those countries warned that the tariffs would harm the economies of all involved, including the United States.
“One tariff will be followed by another in response and so on until we put common enterprises at risk,” Mexico’s president Claudia Sheinbaum said Tuesday during a regular press conference.
Business lobby groups for the US retail and consumer goods industries have also sounded the alarm. Tom Madrecki, vice-president of campaigns and special projects at the Consumer Brands Association, told CNN tariffs were a “clear and present danger” to its members. The group represents Coca-Cola, General Mills, Molson Coors and dozens of other packaged goods companies.
The bulk of Ikea’s goods — some 70% — are produced in Europe, with the remaining 30% made in Asia, mostly China.
On Monday, Trump said he would impose an additional 10% tariff on goods from China until the country prevents the flow of illegal drugs into the US.
Ikea’s Brodin did not directly answer a question about whether Ingka Group, which runs most Ikea stores, plans to relocate any of its production in light of Trump’s tariffs but emphasized that it has longstanding relationships with suppliers of more than 10 years on average.
“(We) stick to long-term relationships, for better or worse,” he said.
Last year, Ikea cut prices on roughly 2,000 products — at a cost of more than €2 billion ($2.1 billion) — to give inflation-weary consumers a break. As a result, it posted a fall in annual revenue in value terms, even though it sold a higher volume of items.
