Ikea increases its US production in response to Trump's tariffs on furniture manufacturers.

Ikea is increasing the number of products it manufactures in the U.S. as the world's largest furniture chain faces pressure from U.S. President Donald Trump's tariffs on kitchen furniture and cabinets .

The Swedish chain , which had sales of $5.5 billion in the US last year, currently produces only about 15% of the products it sells in the country. This contrasts with 75% local production in Europe and 80% in Asia.

"We want to continue growing in the US and Canada. How do we optimize a good supply structure that ensures adequate access to materials, components, and production? We're working for the very long term," Jon Abrahamsson Ring, CEO of Inter IKEA, the brand's owner, told the Financial Times.

This week, Trump imposed tariffs of between 10% and 50% on imported foreign furniture and wood products. Ikea, which accounts for approximately 1% of total industrial production, will be severely affected.

Jesper Brodin, CEO of Ingka, which operates 90% of IKEA's 487 stores, said the group had committed to investing $2.2 billion in both new stores and production facilities in the US by 2023.

"We will continue to look for ways to attract new customers and expand sourcing and logistics in North America, including the US," he said in a separate interview. Ring said that because Ikea imports most of its US products from Europe, he was "cautiously optimistic" about the 15% US tariffs on EU exports, instead of Trump's more punitive tariffs on wood products.

Most of IKEA's competitors import from Asia, where higher tariffs generally apply.

The executives' comments on the tariffs came after Ikea reported a 1% drop in annual revenue to €44.6 billion for the year ending August.

The group attributed the decline to price cuts it implemented in 2024 following a period of high inflation , and said both sales volume and customer visits increased by 3% last year.

Ikea is growing in the Americas, following the opening of stores in countries such as Costa Rica and Panama, as well as new stores in the US, including one in Manhattan's SoHo district.

The Swedish retailer will also open so-called kitchen planning studios in 10 Best Buy stores this year, as part of its effort to consolidate its presence in smaller US cities.

IKEA also announced it is testing a new type of store, called Lada, in smaller locations. The stores will be located in commercial spaces to reduce costs and offer a simpler shopping experience than IKEA's showrooms.

The pilot project includes three stores in the UK (in Norwich, Chester, and Harlow), one in Poland, and one in the US. Tolga Öncü, Ingka's retail sales manager, said the group would decide by the end of the year whether to expand the new format to more locations.

Although the chain has simplified its stores, including eliminating much of the product display, it still guarantees customers that they can receive any product not in the store within 24 to 48 hours, Öncü added.

IKEA has tested numerous smaller formats, especially in urban centers, to bring products closer to its customers as it seeks to reduce its heavy reliance on large suburban stores.

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