The comments from the CEO of IKEA’s largest franchisee come as businesses brace for higher trade levies under a Trump presidency.
Swedish furniture multinational IKEA would prefer to see as few tariffs as possible on traded goods, CEO Jesper Brodin told Reuters on Monday.
The boss of IKEA’s largest franchisee – Ingka – was speaking at the World Economic Forum’s annual meeting in Davos, Switzerland, when he warned of the effect of trade levies on consumers.
Ingka runs IKEA stores in 31 countries and accounts for 90% of global IKEA sales.
“We, and I think probably all international companies thrive from harmonised tariffs, if you like, and actually, the fewer the better, because at the end of the day there is a risk in any country with tariffs that you need to, as a company, pass it on to the customers,” said Brodin.
The CEO noted that high inflation and interest rates have had a “damaging” impact on consumers over the past few years, although he stressed that demand was now improving.
“We are quite optimistic about the outlook and we already see a shift where people are returning to, I would say, a normal situation when it comes to consumption,” he said.
Trump inauguration
Brodin’s comments come as the keys to the White House changed hands on Monday, with Donald Trump sworn in as the 47th US president.
Businesses around the world are bracing themselves for potential impacts linked to Trump’s protectionist trade stance.
During the election campaign, the Republican party leader notably vowed to favour US manufacturing, threatening tariffs on foreign-made goods.
“Donald Trump’s proposed ramping up of tariffs, framed as measures to correct trade imbalances and protect industries in the United States, have the potential to significantly reshape international trade relations and supply chains, with notable consequences for the European Union,” Aurélien Saussay, Assistant Professorial Research Fellow in the Grantham Research Institute at LSE, told Euronews at the time of the election.
On the campaign trail, Trump proposed tariffs of 10 to 20% on all foreign imported goods, raising this levy to 60% for China.
Tariffs can raise the price of goods for consumers buying across borders if import costs are not absorbed by companies.
If protectionist trade policies cause a spike in manufacturing costs, businesses may also choose to charge more for their products.
Climate concerns
Despite the potential impact of tariffs, Brodin said on Monday that his real concern was climate change.
“There is still a myth out there that adapting to mitigate climate change will be an economic loss, in IKEA we have found that is absolutely the opposite,” he said.
“We are here to meet other peers and businesses, government leaders in order to speed up the change because the world is not acting fast enough on this.”
IKEA’s commitment to sustainability has previously come under scrutiny after an investigation by Greenpeace accused the company of irresponsible deforestation practices.
The Swedish firm nonetheless claims that it is “working towards drastically reducing greenhouse gas (GHG) emissions and removing and storing carbon through forestry, agriculture and products”.
