The recently announcement on a new tariff is likely to have an impact on appliance pricing throughout the industry. So, here we will explore this tariff in a little more detail to explain why it may affect your new appliance purchase.
Whether you agree with the principle of the latest tariffs or not, the reality is that it is likely to have some impact on your new purchases. The tariff will affect any goods that are made using aluminum or steel. The 10% tariff on aluminum and 25% tariff on steel is effectively an import tax on all countries except Mexico and Canada, although very recently Mexico and Canada were also added back into the mix.
While only aluminum and steel sourced from foreign countries may be likely to be affected, many industry experts believe that the whole industry will rise with the new tide. The new tariff provides Canadian, Mexican and domestic forges an opportunity to increase their own margins, as their competition will be implementing a significant price increase. Since appliances contain a substantial amount of these materials, we’re likely to see repercussions in the industry.
The Market Impact
In January of 2018, another tariff went into effect on large home style washing machines. This caused some foreign manufacturers including Samsung and LG to announce establishing manufacturing facilities in the United States. Unfortunately, the latest aluminum and steel tariffs may bring foreign manufacturing back into favor.
In reality, the new aluminum and steel tariffs do not affect finished goods made using these materials outside the U.S and imported here. While gorgeous stainless steel refrigerator made using foreign steel by a foreign manufacturer can be imported tariff-free, a domestic manufacturer who offers a similar product will have needed to purchase foreign tariffed steel or domestic steel, which is likely to have been raised in price.
With so many potential implications, it is difficult to predict what will actually happen in the marketplace. Many foreign countries have asked for exceptions to the tariff and may receive them. If the tariffs do hold, foreign appliance manufacturers are likely to put sufficient competitive pressure on the domestic manufacturers that prices may stay the same or only increase slightly. This could mean that domestic manufacturers will end up footing the bill of the new tariff.
Unfortunately, while prices have not yet been affected, we may simply have to wait and see how the new tariffs impact the industry and appliance pricing.
Potential Timetable for Change
The short-term impact is that we’re not likely to see an increase immediately. Most retailers and chains will have purchased their inventory for the next month up to July 4. Most manufacturers will probably allow another buy-in before the holidays, so retailers can increase stock before the new tariffs are enforced.
In the second half of the year, the tariffs will kick in, but some manufacturers may continue to offer discounts to clear older stock to make way for more consistent pricing.
From 2019, we may see substantial increases from some manufacturers, particularly those manufacturing here in the U.S. Fortunately, some manufacturers are building factories here and will be exempt from the new tariffs. It may even mean an increase in domestic production, as imported parts may be exposed. Some brands may decide to absorb additional tariff costs and wait to see if there is a party or policy change in 2020.
Making a Purchase Decision
In the short-term, consumers should not be affected by the new tariff. Retailers will already have inventory from their last buy-in. Unfortunately, there is some uncertainty as to how the new tariffs will impact pricing. So, if you are thinking about replacing your appliances, it is a good idea to consider making your purchase before August or you may need to wait until the new American factories start producing new appliances in 2019 to get the best pricing deals.
If you’re thinking about buying new appliances, you can explore your options with this online home appliance collection, or speak to a home appliance expert for a more specialized service.