Trump imposes 50% tariff on imported washing machines

Impact on overseas manufacturers.

US president, Donald Trump will impose a 50% tariff on imported washing machines into the US, which is likely to pose a significant price disadvantage for manufacturers importing products, compared to US domestic manufacturers.

Euromonitor consumer appliances industry manager, Hye Min Song believes the biggest impact will be on South Korean manufacturers, Samsung and LG.

“They both recently increased their market share significantly within the US major appliances market, giving chase to domestic players such as Whirlpool with their price competitiveness. Given their share in the market, the magnitude of the impact will be greater than other foreign players,” she said.

Song also said the new tariff will adversely impact non-Korean manufacturers who source their products produced outside the US, such as Electrolux with automatic washing machines manufactured in Mexico and imported into the US imposed with a tariff rate of 72.4% by the US government in November 2017.

“Additionally, Midea Group OEM sales from non-US countries to US and European companies in the US market will be impacted and might decline as it loses its price advantages. US and European companies who were looking at OEM supply from lower cost Chinese manufacturers will now need to find other alternatives,” she said.

The tariff will also trigger change in production strategies among these manufacturers, whose production capacity still largely resides in the Asia Pacific region, according to Song. This can be seen from Samsung opening its first US appliances plant in South Carolina amid threat of tariffs and LG building a washer manufacturing plant in Tennessee (Clarksville) as its strategy to mitigate the impact. “Manufacturers will need to re-visit their pricing strategy to justify price premium in the market,” she said.

Growth momentum of the home appliance industry in Asia is expected to remain strong, regardless of the new tariff, as it is the fastest growing market with a large market base in absolute volume and value, Song said.

“Also, its growth is driven largely by the Asian market itself due to growth in household income and increasing urbanisation. If at all, washing machines produced in Asia and imported to US may be reduced, however it will not pose significant impact given the production in Asia is also largely driven by its own consumption within Asian market.”

Euromonitor data shows that in 2017, China was the world’s biggest market for home laundry appliances, in value and volume terms, followed by the US. Whirlpool Corp takes the biggest share (up to 43%), followed by Haier Group (14%) and Samsung Corp (13%) of the US market. Euromonitor predicts the global home laundry appliance market to represent USD64 billion ($A80 billion) by 2022.

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