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What a washing machine trade war might mean for ATMs

| by atm Atom
What a washing machine trade war might mean for ATMs

photo istock

by Daryl Cornell, CEO, Triton

In what may be just the first shot across the bow, President Trump recently enacted tariffs of 20–50 percent on washing machines sold in the U.S. by Samsung and LG, two companies based in South Korea.

These tariffs were enacted on the recommendation of the U.S. International Trade Commission, following allegations by Whirlpool that Samsung and LG were "dumping" washing machines into the U.S. at prices below those in their own country in order to gain market share.

As a result, according to CNBC, Goldman Sachs is forecasting washing machine price increases of up to 20 percent following full implementation of the tariffs.

So what might it mean to U.S. IADs if the Trump administration's "America First" policy should result in tariffs that expanded beyond washing machines to include ATMs?

Well, let's first take a look at the U.S. retail ATM market. There are currently four retail ATM manufacturers, three of them based in South Korea. More than 80 percent of the new retail ATMs sold in the U.S. today are manufactured in Korea or China.

It is estimated that U.S. IADs and merchants operate almost 300,000 Korean-branded ATMs. By contrast, few, if any, American-made ATMs have ever been sold into the Korean market.

On the surface, this would appear to be red meat to an administration eager to right what it claims have been decades of one-sided trade deals. This same administration has termed the U.S.-South Korea trade agreement "NAFTA on steriods."

Fast forward to mid-2018, when ATMs could get caught in the trade crosshairs. The first impact on ISOs would likely be an increase in the price of new ATMs.

If ATM tariffs were to mirror those on washing machines, expect ATM prices to move from sub-$2,000 to as much as $3,000. This will likely be compounded by a projected drop in annual new ATM sales from 40,000 to less than 10,000 in a post-EMV market.

ATM parts support may become even more problematic. Already, inventory taxes in most jurisdictions make it expensive for importers to stock warehouses full of parts to support installed ATMs.

To these inventory taxes, add both tariffs and the threat of internet sales tax compliance with 9,600 taxing entities and you would likely see increased parts prices combined with shrinking availability.

Now to be fair, trade is a complicated issue. Every customer has their own view in regard to buying domestically produced goods as opposed to imports. Countries also take widely different approaches to intellectual property rights, the importance of domestic production and the enforcement of trade agreements.

To be clear, we are not lobbying for trade tariffs against imported ATMs or any other products. In today's global economy, companies must be able to compete on the strength of their people, their products and their business models.

It is only when companies abuse free trade agreements by dumping products into other markets at prices below those in their own countries that governments can no longer afford to turn a blind eye.

Topics: Distributors / ISO / IAD, Manufacturers, Regulatory Issues, Retail / Off-Premises, Service / Parts

Companies: Triton Systems

atm Atom
Posts for the atmAToM blog are contributed by a collective of writers from Triton Systems and ATMGurus — seasoned ATM pros who thought they might like to share a few things they've learned during the last 30 years in the ATM industry. wwwView atm Atom's profile on LinkedIn

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