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By Aleem Lakhani, CEO, VectorSolv

Abstract

This paper presents an assessment of the impact of tariffs on the United States home appliance market. It explores how tariffs influence market dynamics, pricing, consumer behavior, manufacturing strategies, and downstream services. Drawing on economic theory, recent trade data, and government and industry reports, the analysis synthesizes quantitative evidence from multiple studies, including those by the United States International Trade Commission (USITC, 2022; 2023; 2024), Federal Reserve Bank of Boston (Barbiero and Stein, 2025), and the National Retail Federation (National Retail Federation and Trade Partnership Worldwide, 2024). The focus is on the effects of Section 201 safeguard measures, as well as antidumping and countervailing duties, on Chinese and Mexican imports, and the broader implications of proposed tariff escalations. The findings reveal that while tariffs may yield short-term benefits to certain domestic producers, they tend to result in higher prices, reduced consumer welfare, and distortions in global supply chains. Furthermore, the repercussions of tariffs extend to aftermarket services and warranty providers, resulting in increased repair costs, logistical bottlenecks, and a shift in perceptions of product value. The paper concludes with policy considerations that emphasize balanced approaches, taking into account both industrial policy objectives and the impacts on consumers.

Introduction

In recent years, tariffs have reemerged as a potent tool in U.S. trade policy, driven by concerns over trade imbalances, national security, and industrial competitiveness. One of the most significant areas affected by the imposition of tariffs has been the home appliance sector, a crucial component of household consumption and a cornerstone of manufacturing. This paper aims to examine the theoretical foundations and empirical impacts of tariff measures, specifically within the context of the U.S. home appliance industry. It integrates findings from governmental investigations (USITC, 2022; 2023), academic literature (Flaaen, Hortaçsu and Tintelnot, 2019; Dong and Kouvelis, 2020), and market studies (Simon-Kucher & Partners, 2025; National Retail Federation and Trade Partnership Worldwide, 2024) to provide a nuanced understanding of how tariffs influence domestic production, import dynamics, pricing structures, consumer behavior, and aftermarket services.

1. Theoretical Framework on Tariffs and Trade

The imposition of tariffs as a policy tool can be understood through various lenses of international trade theory. Classical models, such as the Ricardian and Heckscher-Ohlin frameworks, emphasize the principle of comparative advantage and the efficiency of free trade. These models posit that countries should specialize in the production of goods for which they possess a relative efficiency and engage in international trade to optimize resource allocation and welfare. Tariffs, under these theories, distort comparative advantages by artificially inflating the cost of imports, leading to the misallocation of resources and resulting in consumer welfare losses (Krugman, P.R. et al., 2018).

Modern theories, including New Trade Theory (NTT) and Strategic Trade Theory (STT), expand the analysis to consider increasing returns to scale, market imperfections, and strategic interactions among firms and governments. NTT, introduced by Paul Krugman, recognizes the roles of economies of scale and product differentiation, suggesting that government intervention, including tariffs, can be justified in promoting industrial agglomeration and innovation (Krugman, P.R. et al., 2018). However, such intervention must be carefully calibrated to avoid long-term inefficiencies (Dong and Kouvelis, 2020).

Strategic Trade Theory goes further by suggesting that in industries characterized by oligopolistic competition, such as high-end appliances or electronics, government support can enhance national welfare by shifting excess profits from foreign to domestic firms. Tariffs, under this view, serve as tools to counteract foreign subsidies, protect infant industries, or retaliate against unfair trade practices. Yet, STT also cautions against the risks of trade wars and retaliatory cycles that may erode the intended benefits (Benguria, Davis, and Liu, 2022).

In addition to theoretical considerations, tariffs have historically served two pragmatic purposes: protecting domestic employment and generating government revenue. Although tariff revenue has diminished as a share of total federal income in modern economies, protectionist motives remain politically potent. The United States' use of Section 201 safeguard measures and Section 301 actions against unfair trade practices reflects this dual role of tariffs as both economic and geopolitical instruments (USITC, 2023).

The case of home appliances is particularly illustrative of these dynamics. It encompasses high-volume consumer goods with global supply chains and is subject to intense competition among multinational corporations. The imposition of tariffs in this sector presents a real-world test of the competing claims of trade theory, particularly regarding the trade-off between short-term protection and long-term efficiency.

2. The U.S. Home Appliance Market and Imports to the U.S.

The United States home appliance market represents one of the largest and most diverse sectors of durable consumer goods globally. In 2023, the U.S. home appliance market was valued at approximately $65 billion, with a projected compound annual growth rate (CAGR) of 3.4% over the next five years (USITC, 2023). Annual unit sales exceed 90 million across major categories, including washers, dryers, refrigerators, dishwashers, microwaves, and air conditioning systems. The market is characterized by significant brand consolidation, with leading players including Whirlpool, GE Appliances (a subsidiary of Haier), Samsung, LG Electronics, and Electrolux. Together, these five manufacturers account for over 80% of total U.S. home appliance sales, both in volume and value (CICC Global Institute, 2024).

A distinguishing feature of the U.S. market is its deep integration into global supply chains. Many appliances sold in the United States are either fully imported or assembled domestically using components sourced from around the world. According to the U.S. International Trade Commission's Year in Trade Report (USITC, 2023), approximately 60% of all major appliances sold in the United States were imported, while a further 25% contained significant foreign components. This reflects the rise of globally dispersed production networks, where final assembly may occur domestically, but the value chain spans continents.

The geographic composition of appliance imports into the U.S. is instructive. China, despite tariff restrictions, remains a major supplier, especially in small appliances and components. Mexico and South Korea are key partners in larger units such as washers and refrigerators. Thailand and Vietnam have increased their market share due to shifts in the supply chain and the adoption of tariff circumvention strategies (USITC, 2024). For example, in 2023, Thailand accounted for 27% of refrigerator imports by volume, while Vietnam supplied 35% of all air conditioning units imported into the United States.

In addition to finished goods, the U.S. also imports a significant volume of intermediary parts essential for appliance manufacturing. These include compressors, motors, control boards, and plastic housings. Most of these components originate in East Asia, particularly from China, Taiwan, and South Korea. Disruptions or tariffs on these inputs not only affect importers but also domestic assemblers reliant on these components for timely production (Dong and Kouvelis, 2020).

The breadth of import penetration varies across product categories. For instance, U.S. production still meets a significant portion of domestic demand for large washers and dryers, with companies such as Whirlpool maintaining extensive manufacturing footprints in Ohio and Tennessee. However, even these domestically produced goods often incorporate foreign-made parts, illustrating the interdependence of global supply chains. Conversely, categories such as microwave ovens and small kitchen appliances are overwhelmingly import-dominated, with some estimates suggesting that over 90% of these products are sourced from abroad (USITC, 2023).

Statistical analysis underscores the sensitivity of the home appliance market to changes in import policy. Following the imposition of Section 201 safeguard tariffs on residential washers in 2018, imports from Korea and China dropped sharply. The USITC documented a 49% decline in washer imports between 2017 and 2019 (USITC, 2023). While some of this decline was offset by new domestic investment—particularly by LG and Samsung in building U.S.-based plants—the data also show that overall prices for washers increased by 11% during the same period (Flaaen, Hortaçsu and Tintelnot, 2019).

Further, the National Retail Federation's 2024 study estimated that proposed new tariffs—60% on Chinese imports and 10% globally—would increase appliance prices by 19.4% to 31.0%, depending on the tariff scenario (National Retail Federation and Trade Partnership Worldwide, 2024)¹. This level of price escalation would not only strain household budgets but also adversely impact demand elasticity, resulting in suppressed sales volumes and downstream effects on aftermarket services.

These dynamics establish the context for understanding how subsequent sections of this paper—on tariff impacts, consumer behavior, and aftermarket services—interact with the structural characteristics of the U.S. home appliance market and its reliance on global trade.

3. The Impact of Tariffs on Home Appliances in the United States

The implementation of tariffs on home appliances in the United States has generated complex and multifaceted impacts that extend across production, consumer markets, corporate strategies, and global trade relations. This section examines how these tariffs, particularly those enacted under Section 201 and antidumping and countervailing duties (AD/CVD), have reshaped the U.S. home appliance landscape.

In January 2018, safeguard tariffs under Section 201 of the Trade Act were imposed on large residential washers and certain parts, including a 20% duty on the first 1.2 million units and a 50% tariff on units beyond that threshold (USITC, 2023). These tariffs led to a sharp contraction in imports, with total volume declining by 49% from 2017 to 2019. This reduction enabled domestic producers, including Whirlpool, LG, and Samsung (which now operate U.S.-based plants), to regain market share and increase production.

However, this supply-side adjustment came at a cost. The average price of washers increased by 11% (Flaaen, Hortaçsu, and Tintelnot, 2019), and dryers—though not covered by the tariffs—saw price increases due to bundled purchases. Consumers effectively paid an additional $86 per washer and $92 per dryer due to the tariffs. NRF's study estimates that a $650 refrigerator would increase to $776-$852, and a $40 toaster oven would cost $48-$52 (National Retail Federation and Trade Partnership Worldwide, 2024).

Beyond the Section 201 measures, the U.S. has aggressively enforced antidumping (AD) and countervailing duty (CVD) duties, particularly on imports from China and Mexico. For example, large residential washers from China were subject to duties following a 2017 USITC ruling (USITC, 2022). The imposition of these duties triggered a response from Chinese firms, which involved shifting production to third countries, such as Vietnam and Thailand, to circumvent the tariffs (USITC, 2024).

Chinese firms, including Haier, Midea, and Hisense, have pursued globalization through acquisitions and local investment to mitigate the impacts of tariffs. Haier's acquisition of GE Appliances and establishment of North American production facilities exemplify this trend (CICC Global Institute, 2024). However, these firms face challenges, including limited brand recognition in the West and a dependence on imported components.

The 2024 study by the National Retail Federation and Trade Partnership Worldwide estimated that new tariff proposals—60% on Chinese goods and 10% globally—would increase home appliance prices by 19.4% to 31.0%, costing U.S. consumers between $6.4 billion and $10.8 billion annually (National Retail Federation and Trade Partnership Worldwide, 2024).

Consumer behavior has also shifted in response to rising prices. Surveys by Simon-Kucher & Partners (2025) revealed that over 80% of respondents believed tariffs increased prices, and more than half changed their purchasing behavior, including delaying purchases, seeking discounts, or switching to budget brands.

These shifts have implications for energy efficiency and product lifecycle. As consumers delay replacement, older and less efficient appliances continue to be used, thereby increasing household energy consumption. This counteracts environmental gains associated with newer, energy-efficient models.

For manufacturers, tariffs increased costs due to higher prices for components such as motors and control boards. Whirlpool and GE Appliances reported a 14% increase in the bill of materials for top-mount refrigerators (USITC, 2024). To mitigate these costs, firms turned to automation, diversified their supplier base, and passed some costs on to consumers.

The broader economic impact includes inflationary pressure. The Federal Reserve Bank of Boston projected a 2.2 percentage point increase in core inflation under proposed tariffs (Barbiero and Stein, 2025). While there were modest employment gains in domestic manufacturing, job losses occurred in the retail, logistics, and service sectors.

Overall, while tariffs reduced imports and stimulated short-term domestic production, they also raised prices, strained consumers, disrupted global supply chains, and produced only marginal competitive benefits. The following section examines how these effects ripple through the aftermarket services ecosystem.

4. Impact of Tariffs on Aftermarket Services

The downstream effects of tariffs extend far beyond the initial point of sale, significantly impacting the aftermarket services sector. This includes technical repairs, replacement parts, extended warranties, and service contracts. As appliance prices rise and supply chains become increasingly constrained, the demand and delivery of maintenance services and protection plans are also altered.

One of the most immediate consequences of tariffs is the increased cost of replacement parts. Many components, including motors, sensors, compressors, and circuit boards, are imported from East and Southeast Asia, particularly from China, Taiwan, and Vietnam. Tariffs on these components have increased their landed cost by 25% to 35%, depending on the origin and classification (USITC, 2023). This increase not only raises the price of appliance repairs but also poses a challenge to service providers in maintaining an adequate parts inventory².

According to recent industry insights, the appliance repair sector is facing increasing disruptions stemming from global supply chain disruptions, tariff policies, and import dependencies. The reliance on imported components—especially proprietary parts like circuit boards and fittings—has left service networks vulnerable to significant delays. A 2024 report from ServiceWorks notes that global supply chain instability has led to widespread parts shortages and rising repair costs, with technicians often waiting weeks for essential components to arrive (ServiceWorks, 2024). These delays are particularly problematic for appliances with smart technologies, where critical components are manufactured in limited locations overseas.

Compounding the issue, the imposition of tariffs on materials such as steel and aluminum—used in a range of appliance parts—has caused additional bottlenecks and price increases. As noted previously, a report by the National Retail Federation projected that tariffs could raise the price of major household appliances by 19% to 31%, increasing the cost of a $650 refrigerator to between $776 and $852 (National Retail Federation and Trade Partnership, 2024). These increases are often passed on to consumers, not only in retail prices but also through more expensive services and longer downtime when parts are delayed.

At the same time, the industry is facing a persistent shortage of skilled technicians. While demand for complex, tech-enabled appliance repairs is rising, the workforce is aging and shrinking. According to industry analysis, 60% of service providers report labor shortages as a significant barrier to timely service delivery (Housecall Pro, 2024). This dual pressure—from both the supply side (parts availability) and the labor side (technician shortages)—has made it harder to meet customer expectations. The result: longer appliance downtimes, more expensive repairs, and diminished satisfaction with warranty-backed service networks.

The shift in repair economics has prompted many consumers to consider extended warranties more seriously. Data from Warranty Week (2024) showed a 9% year-over-year increase in extended warranty uptake, with many consumers viewing service contracts as a hedge against rising appliance and repair costs (WarrantyWeek, 2024). Retailers have responded by bundling warranties more aggressively and offering promotional discounts during periods of high demand.

However, for third-party administrators and insurers underwriting these warranties, tariffs introduce additional uncertainty. The volatility in repair costs makes it more challenging to price plans accurately. Some have had to revise their risk models to account for rising part costs and delays, estimating a 15% to 22% increase in average claim settlement values by 2025 (Warranty Week, 2024).

These changes also affect how consumers perceive the value of appliance longevity. Higher acquisition and repair costs have made households more inclined to hold on to older appliances for more extended periods. This trend leads to the prolonged use of less energy-efficient units, resulting in increased household energy consumption (U.S. Department of Energy, 2023). It also impacts environmental sustainability goals, as fewer efficient appliances are purchased, and more waste is generated from non-repairable units.

Repair professionals in the U.S. home appliance and service sector are navigating a complex landscape marked by shrinking profit margins and fluctuating revenues. In 2024, despite modest industry growth to $6.5 billion (IBISWorld, 2024), repair businesses faced significant headwinds. Operating expenses surged by over 8% due to inflationary pressures, labor shortages, and rising parts costs, eroding already-thin profit margins (Kentley Insights, 2024). For some, this translated to average net losses of over 6%, particularly among small, independent operators (Kentley Insights, 2024). Supply chain disruptions continue to delay the delivery of critical parts. Repairers are also grappling with shifting consumer behaviors. While high appliance prices have led more homeowners to opt for repairs, many remain resistant to the increased fees necessary to cover costlier service delivery (Housecall Pro, 2024). These converging challenges require repair businesses to rethink their pricing strategies to remain viable in a tightening market.

Brand loyalty is another dimension affected by service reliability. Consumers often attribute long wait times and costly repairs to appliance brands rather than to trade policy. This misperception can damage brand equity and reduce repeat purchases, especially when alternative brands are positioned as offering better service support or lower total cost of ownership.

Altogether, tariffs not only influence production and initial sale prices but also shape the entire lifecycle of appliances, from maintenance to replacement. The economic strain placed on aftermarket services can lead to reduced accessibility, inflated costs, longer repair times, and declining satisfaction—all of which feed back into consumer purchasing decisions. The following conclusion will summarize these intertwined effects and highlight strategic policy considerations moving forward.

5. Conclusion

The imposition of tariffs on home appliances in the United States has demonstrated far-reaching and multifaceted consequences that extend well beyond their intended objectives. While such measures have successfully curtailed specific import volumes and incentivized limited domestic investment, the broader ripple effects have been felt throughout the consumer market, supply chains, and aftermarket services.

As illustrated by the case of Section 201 safeguard tariffs on washing machines, tariffs resulted in a significant decline in imports. They spurred domestic production by major firms such as LG and Samsung. However, this came at a cost to consumers, with prices rising by over 10% and spillover effects impacting related products, such as dryers. Moreover, proposed expansions in tariff policy are projected to significantly elevate prices for core household appliances, resulting in billions of dollars in lost consumer welfare.

Tariffs have not only altered purchasing behavior—causing consumers to delay purchases, extend appliance lifespans, or opt for less energy-efficient models—but have also added complexity and increased costs to appliance repair and servicing. Increased prices and delays in sourcing foreign-made parts have strained the capacity of both repair providers and warranty administrators. As consumers increasingly turn to extended warranties as a financial buffer, service administrators face growing uncertainty in pricing and delivery.

On the supply side, domestic manufacturers have struggled with the increased costs of imported components and materials, forcing them to reconfigure global sourcing strategies. Despite some reshoring and investment in automation, the net employment effects remain modest, and broader inflationary pressures primarily offset the benefits.

The impact of tariffs has been regressive, disproportionately affecting low-income households that spend a higher share of income on durable goods. Additionally, older appliances staying in use longer due to cost pressures contribute to increased energy consumption, undermining environmental goals.

In essence, while tariffs can temporarily shift trade balances and boost domestic production in isolated sectors, the U.S. home appliance market reveals how these gains are counterbalanced by substantial costs elsewhere in the economy. Trade policies must, therefore, be crafted with a more holistic perspective—one that considers consumer costs, supply chain resilience, environmental impacts, and the sustainability of downstream service ecosystems.

A more effective long-term strategy may include multilateral engagement to ensure fair trade practices, investment in domestic component manufacturing, and support for workforce development in both manufacturing and repair services. Only with a comprehensive approach can the U.S. harness trade policy as a tool for inclusive and sustainable industrial growth.

Footnotes

1. Scenario A (10/70 Tariff Plan) is a 10% universal tariff and an additional 60% tariff on Chinese imports (resulting in a 70% tariff on Chinese goods). Scenario B (20/120 Tariff Plan) is a 20% universal tariff and an additional 100% tariff on Chinese imports (resulting in a 120% tariff on Chinese goods).

2. The U.S. home appliance repair and parts market was valued at approximately $4.68 billion in 2024, with projections estimating growth to $5.62 billion by 2031, reflecting a compound annual growth rate (CAGR) of 2.6% during this period (Metastat, 2024).

References

Barbiero, O. and Stein, L., 2025. Tariffs and inflation. Boston: Federal Reserve Bank of Boston.

Benguria, F., Davis, S.J. and Liu, S., 2022. Anxiety or pain: The impact of tariffs and uncertainty on Chinese firms in the trade war. NBER Working Paper.

Chakraborty, S., The appliance repair industry: Key trends, challenges, and opportunities, ServiceWorks, 2025. [online] Available at https://blog.service.works/service-business/appliance-repair/appliance-repairindustry/

CICC Global Institute, 2024. The globalization of Chinese home appliance brands: A long way to go. In: The reshaping of China's industry chains. Singapore: Springer.

Dong, L. and Kouvelis, P., 2020. The impact of tariffs on global supply chain configuration: Theory and evidence. St. Louis: Washington University.

Flaaen, A., Hortaçsu, A. and Tintelnot, F., 2019. The production, relocation, and price effects of US trade policy: The case of washing machines. NBER Working Paper No. 25767.

Housecall Pro, 2024. 4 Trends Shaping the Home Services Industry 2024: Report. [online] Available at htpps://wwwhousecallpro.com

IBIS World, 2024. Appliance Repair in the US – Market Research Report. [online] Available at htpps://www.ibisworld.com

Kently Insights, 2024. Appliance Repair - 2024 U.S. Market Research Report.

Krugman, P.R., Obstfeld, M. and Melitz, M.J., 2018. International Economics: Theory and Policy. 11th ed. Boston: Pearson.

Metastat, 2024, US Home Appliance Repair and Parts Market To Reach $5,623.3 Million by 2031, [online] Available at www.metastatinsight.com

National Retail Federation and Trade Partnership Worldwide, 2024. Estimated impacts of proposed tariffs on imports. Washington, DC: NRF Economic Research.

Simon-Kucher & Partners, 2025. 2025 tariff market study: Consumer behavior and retail pricing in response to tariff threats.

U.S. International Trade Commission (USITC), 2022. Large residential washers from China: Investigation No. 731-TA-1306 (Review). Publication No. 5343. Washington, DC: USITC.

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U.S. International Trade Commission (USITC), 2024. Large top mount combination refrigerator-freezers from Thailand: Preliminary determination. Publication No. 5528. Washington, DC: USITC.

U.S. International Trade Commission (USITC), 2023. Year in trade 2023. Annual report. Washington, DC: USITC.

U.S. International Trade Commission (USITC). (2025). Tariffs and consumer prices: Evidence from U.S. retail markets. Atlanta: Federal Reserve Bank of Atlanta.

Warranty Week, 2024. Extended Warranty Costs on the Rise. [online] Available at https://www.warrantyweek.com

World Trade Organization (WTO). (2023). Report on safeguard measures: United States - Large residential washers.

About the Author

With over 25 years of experience in the specialty risk division of AmTrust North America, Aleem carries a deep understanding of the challenges and opportunities in the home warranty industry. As the CEO of VectorSolv Corp., Aleem leads a team of experts in artificial intelligence and computational science who are dedicated to identifying and amplifying insights that creatively disrupt — and automate — the management of home warranties and extended home warranties.

About VectorSolv

VectorSolv is a leader in advanced data analytics and AI-driven solutions for the warranty and extended warranty industry. We specialize in uncovering deep operational and customer insights that empower firms to design, manage, and optimize their warranty strategies. By applying cutting-edge statistical analysis and computational science, we help businesses enhance operational efficiency, drive customer engagement, and unlock innovative business models. Our solutions are tailored to meet the strategic imperatives of forward-thinking organizations seeking to leverage warranty services as a competitive advantage.