Courtesy of GE Appliances

Tariffs imposed by the Trump administration on imported washing machines raised prices on imported washing machines, which was expected —  but it also raised prices on domestically produced washing machines, as manufacturers including Whirlpool and GE Appliances matched the price increases of their foreign competitors.

Most surprisingly, the tariffs on foreign washing machines also appear to have prompted foreign and domestic manufacturers to increase prices for dryers, according to a new study.

The study, by the University of Chicago and the Federal Reserve Board, found that the tariffs raised the median price of washers by $86, or 11.5%, and the price of dryers by $92, or 11.4 percent.

The tariffs are generating about $82 million annually for the federal treasury, but the resulting higher appliance prices are costing U.S. consumers an estimated $1.5 billion per year.

The authors said the tariffs also created about 1,800 jobs, as foreign manufacturers brought some production to the U.S. to avoid the tariffs, and U.S. manufacturers add jobs as they gain market share.

Bottom line, the authors said: The additional 1,800 jobs are costing U.S. consumers $815,000 per job per year.

Donald Trump

The administration of President Donald Trump had imposed tariffs on imported washing machines to protect domestic manufacturing, including from Whirlpool, GE Appliances — but also from foreign-based companies that are making products in the U.S.

The study’s authors observed that as a first response, foreign producers “rushed to ship washing machines to the U.S. before the tariffs went into effect” — but they also brought some production to the U.S. to avoid the tariffs, and Whirlpool said it was adding 200 workers “explicitly due to the new tariffs.”

GE Appliances told Insider this week that it announced $475 million of investments in the U.S. last year and created more than 1,000 new jobs. “We are growing locally, but for that to continue we must continue to drive for efficiencies to be competitive,” the company said in an emailed statement.Our team is working hard with suppliers to find solutions and with other industry members through our trade associations, with government representatives and policy makers to minimize the impact of tariffs as we pursue our owner-is-boss goal.”

GEA is one of Louisville’s largest employers. About 6,000 workers at Appliance Park make products including dishwashers, refrigerators, washing machines and dryers.

GE Appliances is in a unique situation, as it based in the U.S. and therefore not subject to the tariffs, but is owned by Qingdao, China-based Haier, which is subject to the tariffs. That means whenever GEA makes a dishwasher in the U.S., it does not incur the tariff, but if its parent company brings to the U.S. a Haier product that’s made oversees, it does have to pay the tariff.

Prices rise across the board

The study’s authors said that the tariffs prompted foreign manufacturers to increase their prices, which isn’t surprising.

“The striking feature,” they said, “is that all major brands increased prices following the … tariffs. There is no clear distinction between domestic and foreign brands in these results, all within a range of 5 and 17 percent.”

The authors found that Whirlpool raised prices between 13% and 17% for washers and by “at least as much” for dryers, while Maytag increased washer prices by about 14% and dryer prices by up to 20%.

“G.E. had lower price increases of around 7% for washers and about 10 % for dryers,” according to the study.

The authors said that the price increase of domestic manufacturers were not the result of the effect of the increase in raw materials, such as steel, which is subject to a different tariff. The authors had used ranges as their “control product group” because ranges have a similar steel content as washers and dryers.

José M. Fernández, associate professor of economics at the University of Louisville, said the concurrent price increases for both washers and dryers is not surprising.

“Washing machines and dryers are complements. We buy those items often in pairs,” he said. “Think of peanut butter and jelly.”

GE Appliances told Insider that tariffs and raw materials cost increases had put pressure on its bottom line.

GE Appliances employee Brad Tingle secures the tub cover on GE topload washers made in Louisville. | Courtesy of GEA

“For the last couple of years we have been experiencing significant inflation for raw materials such as nickel, copper, aluminum and steel as well as feeling the impact of rising transportation and distribution costs,” the company said. “While 80 percent of our steel buy has been and remains from U.S. sources, the inflation has been a challenge that has become even more serious with recent tariffs on steel and on imported components used in manufacturing our appliances.

“The GE Appliances team has been focused on ways to mitigate the inflation and tariffs while continuing to invest in innovative new appliances and find value for consumers,” the company said. “GEA supports a fair-trade environment that creates a level playing field for companies like us that manufacture in America; one that allows us to continue creating jobs, investing in our communities, innovating new technologies, enhancing our global competitiveness and growing our business.”

GE Appliances is privately held and does not disclose revenue or profit data, but Whirlpool, which is publicly traded, said this week that its net profit for the first quarter was $471 million, or five times the profit it recorded a year earlier, although revenue fell 3.1%.

Net income increased primarily because restructuring costs fell by $118 million and because the company received a $132 million income tax benefit — whereas it had paid $15 million in income taxes a year earlier.

The Benton Harbor, Mich.-based company said that despite weak demand and continued cost inflation, the North American unit delivered strong earnings, in part because of “margin expansion.”

Boris Ladwig
Boris Ladwig is a reporter with more than 20 years of experience and has won awards from multiple journalism organizations in Indiana and Kentucky for feature series, news, First Amendment/community affairs, nondeadline news, criminal justice, business and investigative reporting. As part of The (Columbus, Indiana) Republic’s staff, he also won the Kent Cooper award, the top honor given by the Associated Press Managing Editors for the best overall news writing in the state. A graduate of Indiana State University, he is a soccer aficionado (Borussia Dortmund and 1. FC Köln), singer and travel enthusiast who has visited countries on five continents. He speaks fluent German, rudimentary French and bits of Spanish, Italian, Khmer and Mandarin.