Whirlpool is up on news that the Trump administration is imposing a tariff on washing machines –N. America segment washers are roughly 14% of revenues. They report tomorrow after the close, so we’ll get more commentary on the impact then and on the call on Thursday.
• It’s a 20% tariff (this will decrease by 2 percentage points per year) on the first 1.2 million units and a 50% tariff on machines above that number (this will decrease by 5 percentage points per year) and will last for three years.
• Around 3.4 million units are imported annually
• The largest impact is on LG and Samsung which have roughly 33% combined share
• The impact of this will be offset by the construction of US based capacity by LG (in Tennessee) & Samsung (in S. Carolina) which is expected to start coming on line this year.
• Another mitigating factor is LG & Samsung may have shipped excess inventory in anticipation of this tariff.
• If WHR raises prices in response, assuming 80% incremental margins on a price increase, they could get $100m to $200m in incremental operating profit.