Electrolux suspends $250 million U.S. investment after steel tariff announcement

Is the cost of your next appliance about to go up?


First the laundry, now the fridge? A month after the Trump administration announced heavy tariffs on washing machines from companies like LG and Samsung, new taxes on imported steel may impact your kitchen appliances too.

Europe’s largest appliance maker has put the brakes on a planned $250 milion investment in a manufacturing plant in Springfield, Tennessee, citing concerns about the current administration’s new plans for a tariff on imported steel. Reuters reports that Electrolux is waiting to see the formal announcement before making a decision.

“We are putting it on hold,” Daniel Frykholm of Electrolux said. “We believe that tariffs could cause a pretty significant increase in the price of steel on the U.S. market.”

The plant expansion, which was just announced in January and scheduled to begin this year, would have added 400,000 square feet of capacity and enabled production of a new line of Frigidaire cooking products, according to the Tennessean. “Unfortunately, this decision gives foreign appliance manufacturers a cost advantage that is hard to compete against,” Eloise Hale of Electrolux said in a statement.

She added that all the carbon steel the company uses for American manufacturing of appliances like refrigerators and washing machines is purchased from U.S. steel mills.

The details of the planned tariffs on imports — 25 percent on steel and 10 percent on aluminum — will be formally announced soon. Even though Electrolux doesn’t import any steel, it has concerns about rising prices here in the U.S. “So this is not the possibility of tariffs directly impacting our costs, but rather the impact it could have on the market and that it could damage the overall competitiveness of our operations in the U.S.,” Frykholm explained.

Meanwhile, others are moving ahead with U.S. plans. Samsung announced the opening of its first ever appliance manufacturing plant in the United States in mid January, in Newberry, South Carolina. Its planned output? Washing machines. And LG broke ground on its plant in Clarksville, Tennessee in August — though the mayor worries that tariffs and trade wars may jinx the deal. LG does expect the cost of machines to rise, thanks to the tariffs.

“As a result of the trade situation, we will be initiating pricing actions, which will be sent under separate cover shortly,” LG executive Thomas Yoon said in a memo obtained by CNNMoney.

The surprise announcement of the new tariffs caught many in the administration off guard, caused turmoil in the manufacturing sector, and led to speculation about a trade war. According to politics blog The Hill, Canada and the United Kingdom have already voiced their displeasure about the proposed import tariffs and warned of possible retaliation.

“Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers,” Canadian Foreign Minister Chrystia Freeland said in a statement.

The New York Times notes that other European leaders have said the proposal violates the rules of the World Trade Organization. The president of the European Commission, Jean-Claude Juncker, was even more direct, vowing to target American products like Harley-Davidson motorcycles, Kentucky bourbon, and Levi’s blue jeans.

“None of this is reasonable, but reason is a sentiment that is very unevenly distributed in this world,” he declared.


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