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Washing Machine Prices Offer Early Glimpse At Impact Of Tariffs

The Trump administration’s tariff parade really kicked off at the start of this calendar year when it levied import taxes on foreign-made washing machines. Announced back in January, the policy called for 20 percent tariffs on the first 1.2 million units imported annually, and up to 50 percent tariffs on additional imports beyond that limit.

Now nearly 10 months later that policy offers a pretty damning look at how this escalating trade war with China could impact product pricing and availability, and consumers’ wallets.

For starters, it’s important to understand the difference between the sweeping washing machine tariff and the various rounds of tariffs proposed and levied against Chinese imports. The washing machine tariff specifically targeted a complete, finished product and applies to all washing machine imports that come into the US leaving no confusion as to what type of product is impacted. The Chinese tariffs, which currently apply to some USD 250 billion in Chinese imports, mainly apply to parts of the whole when it comes to the consumer tech industry. That is, components within electronic devices that contribute to the overall working nature of the product—things like circuit boards. So, these are the same blanket tariffs that were applied to the foreign-made washing machines, but they still have their own supply chain costs that will ultimately be impacted by these impending tariffs.

Additionally, the rate of the import tax varies between the two policies. Whereas washing machines face tariffs on imports that range between 20 percent and 50 percent, Chinese goods are generally facing tariffs between 10 percent and 25 percent.

Still, the impact on the washing machine industry is worth looking at, because at the very least it offers a glimpse at what’s to come for other products facing hefty import taxes. And, looking at the recent trajectory of the category, there’s plenty to be worried about.

According to recent analysis done by the American Enterprise Institute, the washing machine industry saw its largest-ever three-month increase in prices. From February through May of this year washing machine prices were up 16.4 percent, per data from the Bureau of Labor Statistics data on laundry equipment pricing—the largest such increase in that report’s 40-year history. By comparison, washing machine prices had been on the decline, falling more than 5 percent year-over-year in 2017, and edging even a little lower at the start of this year, according to a Business Insider report.

Going a step further, the impact extends beyond the cost of washing machines to the total number of washing machines being imported into the U.S. According to data from the U.S. Census Bureau, washing machine imports have drastically decreased in the months since the tariff was put in place. In analyzing that data, Forbes contributor Ken Roberts noted that washing machine imports fell more than 30 percent year-over-year in four of those five months and that’s after having grown in the seven previous months.

So, what we are looking at here are fewer options for consumers coupled with higher prices. And this is just washing machines that we’re talking about. Imagine what the data will return in a year or less when we’re reviewing the cost of goods associated with more than half of all Chinese imports that face still tariffs.— Dealer Scope

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