South Korean tech giant LG Electronics Inc. reduced its refrigerator production volumes in Vietnam, a move tha is viewed as a proactive response to a worst-case scenario for U.S. tariff policy.

The Donald Trump administration imposed a high tariff of 46 percent on Vietnam in April 2025, the second highest among the United States’ top 10 trading partners after China (125 percent).

While Cambodia (49 percent), Laos (48 percent), and Madagascar (47 percent) also face high tariffs, their trade volumes with the United States are minimal compared to Vietnam.

LG Electronics currently produces refrigerators in Hai Phong, Vietnam; Monterrey, Mexico; and Noida and Pune, India, making it highly sensitive to country-specific tariff rates.

The tariff rates imposed by the United States on these countries are 46 percent for Vietnam, 27 percent for India, and 25 percent for Mexico.

Products from Mexico, however, could be exempt from tariffs if they are certified under the United States-Mexico-Canada Agreement (USMCA).

The urgent concern is that a deadline is approaching.

The Trump administration granted a 90-day tariff waiver - excepting China - to countries including Korea, Vietnam, Japan, and the European Union, on April 9th, 2025.

This means that its reciprocal tariffs will be applied from July 9th, 2025, onwards.

“There may be exceptions in some cases,” Trump said on Friday local time. “But some countries may face much higher rates - 40 percent, 50 percent, 60 percent, as they’ve done to us over the past few years.”

This highlights the need for careful risk management.

LG Electronics significantly expanded its production capacity in Hai Phong in 2023 with the establishment of a new washing machine line.

According to the company’s business report, its annual washing machine production capacity increased by 834,000 units from 9.42 million units in 2023 to 10.25 million in 2024, while its actual production rose from 9.71 million to 11.33 million units over the same period, an increase of 1.63 million units. This suggests Hai Phong’s washing machine capacity ranges from approximately 800,000 to 1.6 million units annually.

Refrigerators account for a significant portion of LG Electronics’ total revenue. The company reported total sales of 87.73 trillion won ($61.91 billion) in 2024, of which refrigerators, washing machines, and air conditioners made up 28 percent, or 25.19 trillion won.

The refrigerator line in Vietnam is the latest facility built in 2023, and refrigerators produced there are exported globally.

According to Hai Phong City statistics, LG Electronics accounts for 43 percent of the city’s total exports and 80 percent of all exports from the city are destined for the United States, underscoring the site’s importance as a global production hub.

However, with no signs of a tariff deal between the United States and Vietnam, local businesses are on high alert. Hai Phong officials warn that if the 46 percent tariff on Vietnamese goods is finalized, it will deal a heavy blow to local firms.

Of the 10 key companies operating in Hai Phong, LG Electronics’ local subsidiary is expected to suffer losses of $460 million, second only to Pegatron Vietnam Co. - a major Apple Inc. supplier - at $485.27 million.

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