Whirlpool, a Tariff Supporter, Now a Tariff Victim: Dear Whirlpool

Whirlpool reports an unexpected quarterly loss and also lowers guidance. A housing slowdown and tariffs are in play.

Washing-machine maker Whirlpool reports a quarterly loss, a 3.9% decline in revenue, and its shares slid 8% after hours.

That's not all: The Wall Street Journal reports Whirpool Cut Its Profit Outlook for the Year.

Whirlpool Corp trimmed its full-year profit outlook as it booked a large charge on its European operations and said it wouldn’t be able to offset the effect of steel tariffs with higher prices for consumers.

The company said Monday it now expects to pay about $350 million more this year from rising raw-material costs as it faces “a very challenging cost environment.”

A sales drop of 2.2% in North America came as Whirlpool and rivals such as Electrolux AB pushed through price increases to offset the steel tariffs and held back from big discounts during holiday sales, according to analysts. Retail prices of washers and dryers are up 20% in the latest quarter from a year earlier.

Whirlpool supported import tariffs on appliances produced overseas but much of the benefit was countered by the effect of levies on steel imports introduced earlier this year.

Dear Whirlpool

Dear Whirlpool, the next time you support tariffs think about what you ask. Moreover, think about something the WSJ failed to mention: Tapped out consumers and a slumping housing market.

Houses are already insanely unaffordable and you supported tariffs to protect your uncompetitiveness.

Care to try again?

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Mike "Mish" Shedlock

Comments
No. 1-25
Metronome
Metronome

Mish, haven't you been talking about demographics shift for over a decade now? Kids can't afford housing. No demand for housing - no demand for appliances.

I think tariffs barely make a dent in this baked in terminal decline.

Stuki
Stuki

"Will not the invisible hand also stoke new local competition ( i.e. job producers) to meet demand at prices slightly under the new gouging rate?"

But, given that this "new, local competition" needed tariffs to be made viable, not at pre tariff prices.... Meaning, Whirlpool still will be stuck buying more expensive steel than their competitors. Leading to higher costs, higher prices, lower sales, less manufacturing employment at Whirlpool. Ditto for all industries where steel is used as an input. And, since all those industries add up to much more workers than steel mills ever will, hence sum total less demand for manufacturing labor. Hence lower manufacturing wages.

It's entirely general, and logically inevitable, that if you put in place barriers that reduce the efficiency at which labor is transformed into economic value (as in, increase any other input cost than local labor itself), each unit of work will create less value. Hence those providing said units of work, will be able to command less of a wage for their work.

Dicking around with government setting, or heavily influencing, relative prices may, at least in the short run, be able to create small groups of "winners." Say, by transferring wages from Whirlpool employees to steel mill employees. But unless your scheme somehow succeeds in making the US, as a whole, more efficient; total wages will decrease. Of course, committed dittoheads have been buying into their favorite Dear Leader's ability to beat a free market at ferreting out efficiency, for as long as there have been Dear Leaders and dittoheads....

ML1
ML1

Houses are insanely unaffordable because 1) wages have stagnated due to offshoring of factories and through importing millions of illegal immigrants to lower wages 2) due to banks again lending like they were doing 2003-2007 without worry which raises prices when one can get more and more debt 3)huge property taxes to fund the increases in school costs caused by increased numbers of kids needing more help from those millions of illegal immigrants and also teachers unions blackmailing higher wages while protecting incompetent teachers. 4) due to low rate policies by the fed since people buy houses based on the monthly payment they can afford. 5) due to increased demand for houses brought by the millions of illegal immigrants 6) due to other costs like healthcare and college taking such huge parts of people's budgets. . But hey at least chinese imported crap is cheap at Walmart and one can get a deal on landscaping work from illegal immigrants so no worries.