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Tariffs send appliance makers looking down Mexico's way for optimal production base

Published: 13 Aug. 2025, 19:03

Customers look at an LG Signature washer and dryer on display at a Lowe’s store. [NEWS1]

Korean appliance makers are ramping up efforts to find the “optimal production base” for the North American market after the United States confirmed “reciprocal” tariffs for most countries, with Mexico emerging as a leading option.

While the United States imposed a 25 percent reciprocal tariff on Mexico, home appliances remain exempt. Even if some tariffs are applied, Korean companies see Mexico’s proximity to the United States as a major logistical advantage.

U.S. tariffs stood at 15 percent for Korea as of Tuesday, 19 percent for Thailand and Malaysia, 20 percent for Taiwan and Vietnam, 25 percent for Mexico, 30 percent for China and 50 percent for India.

Although Mexico’s tariff rate is higher than Vietnam’s and other Southeast Asian countries, shipments of home appliances currently remain duty-free under the U.S-Mexico-Canada Agreement (Usmca).

Steel derivatives face tariffs of up to 50 percent depending on content, but appliances generally have a steel content of around 10 percent, which companies consider manageable compared to logistics costs from other regions.

As Mexico remains in talks with Washington, the United States agreed to keep current tariff rates in place for 90 days from Aug. 1, prompting Korean companies to maintain or expand their operations in Mexico.

LG Electronics will begin producing washing machines in Mexico for the first time in September. The company earlier this year consolidated the TV production it had been running at its Mexicali, Mexico, plant into its Reynosa, Mexico, plant, and now plans to convert the vacated Mexicali facility to washing machine production.

The company is also considering adding dryer production. Even if reciprocal tariffs are applied in the future, the company believes Mexico will remain a better option than Korea or Southeast Asia for supplying North America when factoring in shipping costs.

Once production begins, LG will manufacture all three major home appliances in Mexico: TVs in Reynosa, refrigerators in Monterrey and washing machines in Mexicali.

The company has mainly produced washers and dryers for North America at its Clarksville, Tennessee, plant and some Southeast Asian facilities, but now plans to expand its Mexican share.

Samsung Electronics is also expected to maintain its current production levels in Mexico.

Earlier this year, the company had considered shifting dryer output from its Queretaro plant to the United States, but the plan has been put on hold.

Samsung Electronics makes refrigerators, washers and dryers in Queretaro, and TVs and monitors in Tijuana, while producing washers in Newberry, South Carolina. Industry observers say Samsung could move some appliance production for North America from Southeast Asia to its Tijuana plant, citing high labor and facility expansion costs in the United States.

Samsung Electronics released a new side-by-side refrigerator with enhanced AI technology and personalized features. [NEWS1]

But uncertainty remains. In addition to ongoing reciprocal tariff negotiations, the scheduled Usmca renegotiation next year could affect strategies.

The pact, launched in 2020, requires renegotiation every six years, but U.S. President Donald Trump has pushed for earlier talks, raising the possibility of renegotiations beginning as soon as the second half of this year.
The Korea International Trade Association’s Institute for International Trade said in a recent report that “a Usmca revision could bring structural changes to Korean companies’ supply chains and impact their competitiveness in sales and exports within North America.”

“Even if the Usmca is renegotiated, the supply chains of the three countries are so intertwined that the Trump administration will find it difficult to make the situation worse,” said Kim Tae-hwang, a professor of international trade at Myongji University. “Mexico will remain the most attractive production base for the Korean appliance industry.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom staff.
BY YI WOO-LIM [[email protected]]