LG Electronics CEO Cho Joo-wan: "Tariff Impact to Begin in Q2... Building a U.S. Plant Is a Last Resort"
LG CEO Hints at Possible Price Hikes as U.S. Tariff Impact to Intensify in Q2 Expansion of U.S. production facilities considered only as 'last resort' Cho Joo-wan, CEO of LG Electronics, suggested that the impact of U.S. tariff policies would become significant starting from the second quarter and hinted at the possibility of raising product prices if necessary. However, he emphasized that expanding local production facilities in the United States would be considered only as a “last resort,” expressing a cautious stance. According to industry sources on the 27th, Cho spoke with reporters on April 24 prior to delivering a special lecture to the Department of Electrical and Computer Engineering at Seoul National University. He said, "If the tariff hikes exceed the level we can absorb, we may consider raising the prices of home appliances destined for the U.S. market." He further explained, "Whether the tariffs worsen or improve our performance, the effects will start from the second quarter," noting that the so-called "pull-in effect"—early stocking before tariff enforcement—was not prominent in the first quarter. Regarding potential price hikes, Cho stated, "For some products, it will be necessary," adding, "We will absorb as much of the tariffs as possible through operational efficiency and inventory management." However, he stressed again, "If the level of tariff hikes surpasses what we can endure, price increases will be considered." Cho’s remarks suggest that while LG can absorb a basic 10% tariff through internal efficiencies such as streamlining operations and rotating inventory, significant increases beyond that threshold would likely lead to price hikes. Currently, LG Electronics manufactures washing machines and dryers at its Tennessee plant in the U.S., while refrigerators, cooking appliances, and TVs are produced in Mexico, and refrigerators and washing machines are manufactured in Vietnam. LG is preparing multiple scenarios to cope with potential reciprocal tariffs, including expanding U.S. production, leveraging its global manufacturing network, and raising product prices. Although the Trump administration has so far postponed country-specific reciprocal tariffs, a basic 10% tariff has been imposed on all countries. However, Cho reiterated that relocating production or expanding plants would be a last resort, stating, "Building a U.S. production base should be the very last option," and adding, "We should first respond step-by-step through production site adjustments or price hikes." Earlier, during its first-quarter earnings conference call held on April 24, LG Electronics had also stated, "We will maximize the use of our production sites in Mexico and the U.S. to minimize tariff impact," and "Secure cost competitiveness through a flexible global production network." Meanwhile, LG Electronics posted consolidated first-quarter sales of KRW 22.7398 trillion and an operating profit of KRW 1.2591 trillion. As Cho warned, concerns are rising that second-quarter results could weaken due to the full-fledged impact of global trade policy shifts, including the U.S. tariff increases. ChatGPT를 사용하여 번역한 기사입니다.
