SEOUL, July 26 (AJP) - LG Electronics said Friday it will expand production in Mexico and the United States to respond to reciprocal tariffs taking effect August 1, while considering price increases as part of its strategy to counter rising costs. The South Korean appliance maker outlined its tariff response plans during a second-quarter earnings conference call, warning that policy volatility and weakening consumer sentiment are dampening home appliance demand outlook.
The company said it faces cost pressures from 50 percent steel tariffs and reciprocal tariffs, which will create greater market price uncertainty in the second half. LG Electronics plans to begin washing machine production at its Mexicali, Mexico facility in September to provide flexibility in responding to tariff impacts. The company will expand supply from both U.S. and Mexican production sites once reciprocal tariffs take effect on August 1.
LG Electronics currently manufactures washing machines and dryers at its Tennessee plant, while producing home appliances and televisions in Mexico and refrigerators and washing machines in Vietnam. The company said it will maintain its current production system while operating regional product supply bases in the U.S. based on competitiveness considerations. Regarding potential price increases, executives said decisions would be made carefully after considering policy changes, economic trends and discussions with distribution channels.
The company's vehicle components business through LG Magna is also expanding international production, with the Mexico plant accounting for 30 percent of sales in the first quarter and expected to reach the low 40 percent range by the fourth quarter. LG Magna's Hungary plant, completed in December 2024, is scheduled to begin operations in mid-2026. The air conditioning division reported order backlogs growing three times compared to the previous year, driven by data center demand.
LG Electronics expects shipping costs to improve in the second half compared to the first half, citing completed maritime freight bidding for second-half contracted volumes and declining sea freight rates starting in July. The company is also conducting early shipments of sales volumes and expanding regional production ratios as part of its U.S. tariff response measures, while mixing existing and new shipping companies to secure additional freight competitiveness.
reporter
Candice Kim
candicekim1121@ajupress.com
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