Whirlpool Corporation has experienced a significant increase in raw material costs following the imposition of tariffs by former President Donald Trump in 2018. The tariffs introduced a 25% duty on steel and a 10% duty on aluminum, raising Whirlpool's costs by $350 million. While the tariffs have impacted various industries, the effects have been particularly pronounced for companies reliant on steel and aluminum, such as car manufacturers and other major corporations.
The automotive industry, heavily reliant on steel and aluminum, has also felt the impact of these tariffs. A single car can contain hundreds, if not thousands, of pounds of these metals. However, many car manufacturers have managed to insulate themselves from immediate cost increases by locking in rates through multi-year contracts. Meanwhile, Whirlpool sources approximately 96% of its steel domestically, but the tariff's influence remains a concern for its executives.
Whirlpool's Strategic Response
Whirlpool's CEO has expressed reservations about the tariff, indicating that it would be more beneficial not to have it in place.
“It would be better not to have (the tariff),” – James Quincey
Despite the added costs, Whirlpool remains a robust multibillion-dollar US business. A spokesperson from the company emphasized that while the tariff is significant, it does not drastically alter the company's operations.
“Approximately 96% of the steel used in our US factories is sourced from domestic suppliers,” – Whirlpool spokesperson
“Still, we understand there will be implications, and we will be evaluating the overall impact relative to the recent US trade decisions and any further actions by its trade partners,” – Whirlpool spokesperson
Automotive Industry's Resilience
General Motors (GM), a major player in the automotive industry, primarily sources its steel domestically at relatively fixed rates for several years. Despite this stable arrangement, GM is not entirely shielded from potential market spikes in commodity prices due to tariffs.
“There’s probably going to be an increase in costs related to market prices, but that should subside over time,” – Paul Jacobson
The automotive sector's strategy of securing long-term contracts has provided some buffer against immediate tariff impacts. However, as contracts are renegotiated and market conditions fluctuate, manufacturers may continue to face challenges.
Diverse Approaches Across Industries
Pentair, a water treatment company, purchases $100 million worth of aluminum and steel from foreign sources and $125 million worth of components from China. The latter already faces a 20% tariff on non-steel or aluminum goods. In response to these challenges, Pentair's CEO has indicated proactive measures to minimize potential impacts.
“We’re closely working with our suppliers to mitigate potential impact,” – Roxanne Warner
Campbell's Company, importing steel from Canada to manufacture cans, anticipates implementing price increases across its operations due to the tariffs. This strategy highlights how different industries are adapting their business models in response to increased costs stemming from international trade policies.