Tariff-Loving Whirlpool Suffers From...Tariffs

♠ Posted by Emmanuel in , at 7/24/2018 04:36:00 PM
Whirlpool's tariff-loving geniuses are now having a hard time dealing with, er, tariffs draining away their profits.
Just today, the uber-protectionist Trump tweeted about his enduring love for taxes on imported goods. Which, of course, is a rather contradictory thing to do for someone purportedly wishing to minimize government intrusion on people's lives. That's not to say he had his supporters. Take the case of Whirlpool. Apparently unable to compete with foreign appliances, it successfully petitioned the government to hit imported washing with tariffs.

I suppose this story would be happier for Whirlpool had the Trump administration stopped there. However, it also hit imported steel with stiff 25% tariffs (and another 10% on aluminum). Apparently, Whirlpool didn't prepare for those tariffs on raw materials since it's now taking a large financial hit largely due to its increased manufacturing costs:
"Tariffs are the greatest!" President Donald Trump said on Twitter Tuesday morning. Whirlpool used to agree. In January, when Trump announced tariffs on imported washing machines, CEO Marc Bitzer told analysts, "This is, without any doubt, a positive catalyst for Whirlpool."

But the Trump administration didn't stop there. It imposed tariffs on steel and aluminum, sending raw material prices skyrocketing. Steel prices in the United States are 60% higher than the rest of the world, Bitzer told analysts on Tuesday. That has raised costs for Whirlpool by $350 million and squeezed its profit margins. Now Whirlpool is backtracking on its protectionist cheerleading. he company on Monday slashed its profit outlook for 2018 in part due to a "very challenging cost environment."

Whirlpool's (WHR) stock tanked 12% on Tuesday after it missed Wall Street's expectations. "The global steel costs have risen substantially, and in particular, in the US, they have reached unexplainable levels," Bitzer told analysts. "Uncertainty" around additional tariffs and global trade had disrupted Whirlpool's supply chain, he said.
Good job, Whirlpool. This episode perfectly illustrates the dangers with initiating trade war: where do they stop? One you go down that slippery slope, there's no telling how they will affect other business operations since you cannot expect Trump and his minions to do your bidding perfectly. It does serve them right, but American consumers would probably wish they'd never started down this road in the first place--especially those in the market for new washer/dryers.

All hail Trump and his "greatest" tariffs!