SEOUL (Reuters) – LG Electronics Inc said it will hike prices on its washing machines sold in the US after the Trump administration slapped tariffs on large imported residential washing machines.
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The South Korean home appliance maker, later reporting quarterly earnings, also warned that US protectionism would strengthen this year.
US President Donald Trump approved recommendations Monday to impose tough safeguard tariffs on washing machines, following findings by the US International Trade Commission that these imports were “a substantial cause of serious injury to domestic manufacturers.”
The ITC’s recommendations, which would protect American appliance makers including Whirlpool Corp, were made in November to keep Samsung Electronics Co Ltd and LG from flooding the US market with inexpensive washers.
A 20 percent tariff will apply on the first 1.2 million imported washers in the first year, and a 50 percent tariff on machines above that number.
The tariffs will affect most front- and top-load type washers, LG said in a letter to retailers.
“LG Electronics plans to supply shipments smoothly to minimize impact on local partners and customers,” LG said in a statement, referring to the recent US decision to slap tariffs on washers.
Mr Trump ignored a recommendation from the ITC to exclude South Korean-produced washers from LG from the tariffs, as prior anti-dumping duties on these machines have been dropped.
Anticipating such a move, LG has been building a washer factory in Tennessee that will begin production as early as the end of 2018, while Samsung recently began washer production in South Carolina.
“Global economic uncertainty such as US protectionism is expected to increase this year,” Bae Soo-han, an LG Electronics executive, said at an earnings conference call.
An LG spokesman said nothing had been decided on the timing or amount of its washer price increase.
LG reported yesterday that it had swung to an operating profit of 367 billion won ($346 million) in the fourth quarter compared to a year earlier, boosted by strong sales of TVs and home appliances.
Jon Abt, co-president of retailer Abt Electronics, said the price of washers made outside the US may increase only by about $50 as he expected the tariff to be borne by manufacturers rather than consumers.
“If somebody really wants an LG washer, they’re going to spend that extra money for it,” Mr Abt said in an interview on Wednesday, adding that Samsung and LG had been planning for such a move and that their US plants would mitigate the blow from the tariff.
“The indications we’re getting from our manufacturing partners is that this shouldn’t have a huge impact on their overall business,” he said. Mr Abt counts LG among its top washer vendors, after Whirlpool, General Electric Co and Samsung.