IKEA is preparing to substantially increase the share of products it sources from U.S.-based factories, marking a strategic reversal after years of moving production abroad. The decision comes as the Trump administration’s tariff regime pushes import costs higher, particularly for bulky items such as sofas, bookcases and mattresses. While IKEA says the plan is part of a broader global initiative to localize production and shorten lead times, the timing underscores how geopolitical pressures and supply-chain volatility are reshaping the economics of consumer retail. For a company that built its identity around affordable design, the success of this pivot will be critical to maintaining price competitiveness in its second-largest market.

Localization as a Response to Tariff and Cost Pressures
IKEA’s renewed focus on U.S. sourcing reflects the convergence of rising import tariffs and pandemic-era lessons that exposed vulnerabilities in global logistics. Susanne Waidzunas, Inter IKEA’s Global Supply Manager, noted that stores across North and South America rely heavily on long-distance shipping, leaving the company exposed to rising ocean freight costs, congestion and unpredictable delivery schedules. Producing closer to consumers not only reduces logistical risk but enables quicker adjustments to changes in demand—an increasingly valuable capability in a retail landscape marked by inflation sensitivity and rapidly shifting consumer preferences.

Although IKEA had operated a production facility in Danville, Virginia until 2019, the share of U.S.-made products declined to just 15% by 2024. With tariffs driving up import expenses, IKEA was forced to raise prices on select items, contributing to two consecutive years of declining sales as budget-conscious shoppers pulled back. Rebuilding domestic manufacturing capacity therefore serves both a cost-containment purpose and a strategic need to stabilize pricing.

U.S. Manufacturing Capacity Begins to Scale
The company’s shift is already underway. SBA Home, a Lithuanian supplier to IKEA, is scaling operations at its new $70 million factory in Mocksville, North Carolina. Backed in part by Inter IKEA, the facility will manufacture roughly two million pieces of furniture annually, including top-selling KALLAX shelving systems. This investment reflects IKEA’s broader ambition to expand the network of U.S. suppliers, especially for bulky, high-volume items where shipping costs have become prohibitive.

Despite higher labor and production costs in the U.S., the company argues that the decline in shipping reliability offsets some of that disadvantage. The pandemic-era disruptions—and their lingering effects—have recalibrated the trade-off between manufacturing expenses and logistics efficiency. For many retailers, long-distance sourcing is no longer the clear cost winner it once was.

Strategic Implications for IKEA’s North American Expansion
IKEA’s emphasis on regional production aligns with its accelerated expansion plans across the Americas, including new markets in Costa Rica and Panama. A more resilient supply chain allows the retailer to support store openings with faster replenishment cycles and lower risk of stockouts. It also positions IKEA to better manage tariff exposure at a time when trade policy has become increasingly unpredictable and politically charged.

For U.S. suppliers, IKEA’s shift may offer long-term opportunity. The company’s global scale and standardized product lines can provide reliable demand for manufacturers capable of meeting stringent quality and volume requirements. Existing partners such as Sauder Woodworking could see expanded orders, while new suppliers may emerge in categories like mattresses, a segment IKEA aims to source predominantly from domestic production.

Future Outlook
IKEA’s move toward U.S. manufacturing reflects a broader transformation in global retail supply chains as companies hedge against trade disruptions and geopolitical risk. While producing in the U.S. is costlier, the stability and responsiveness it offers may prove essential to maintaining price leadership. The coming year will test whether localized production can meaningfully offset tariff pressures and support IKEA’s turnaround in the U.S. market. If successful, the strategy may become a model for other multinational retailers reassessing the balance between global efficiency and regional resilience.