HVAC imports from Mexico face 25% tariff

President Trump on Saturday signed a trio of executive orders imposing 25 percent tariffs on goods imported from Canada and Mexico, along with an additional 10 percent tariff on Chinese goods. 

Why it matters: Major HVAC manufacturers, including Carrier, Daikin, Lennox, and Trane, which hold over a 60 percent share of the U.S. market, have manufacturing exposure in Mexico and source components from China. 

What’s happening: The orders, largely meant to curb the flow of illegal immigrants and drugs into the U.S., did not specify affected products, suggesting the tariffs apply to all imported products from the countries. 

• Of note: The President warned that he might increase the initial 25 percent rate on Canada and Mexico if they impose retaliatory tariffs — a step both countries are taking. 

Zoom out: This marks the second tariff decision affecting the HVAC industry in the past year, following the Biden administration’s September hikes on certain steel and aluminum products from China, including heat exchangers.

• “[While we] appreciate the efforts to prioritize products that are manufactured on American soil, these new tariffs will undoubtedly create additional cost and supply chain issues for contractors,” ACCA said at the time. 

What they’re saying: The Saturday announcement comes just days after Lennox and Trane’s CEOs expressed confidence in their ability to navigate tariffs.

• “We’ve dealt with tariffs in the past,” said Trane CEO Dave Regnery. “Do I think they could impact our supply chain? For sure. But we understand our cost inputs… [and] we’re going to act very quickly.”
• “We’ve done a really good job at reducing our supply chain reliance on China,” added Lennox CEO Alok Maskara. “If [tariffs are] long term, we’ll start looking at making more product [in the U.S.],” he noted.

What we’re watching: The average import price for HVAC equipment, which has risen by 10 percent over the past five years, per the Federal Reserve. 

What’s next: The tariffs on Mexico will take effect in early March and remain in place “until such time as drugs, in particular fentanyl, and all illegal aliens stop this invasion of our Country,” the White House wrote. 

• Representatives for Carrier, Lennox, and Trane didn’t respond to requests for comment.

Editor’s note: This story was updated on February 3 to reflect President Trump’s decision to delay tariffs on Mexico by one month.