LG Electronics is considering reopening its Mexicali plant in Mexico, six months after it was shut down, as part of a broader strategy to convert the facility into a dedicated washing machine and dryer production hub. Despite ongoing tariff risks between the United States and Mexico, the company appears to be taking a bold step to respond more effectively to North American demand and strengthen supply chain efficiency.
According to a report published on July 8 by regional Mexican outlet Creala Noticia, Salvador Maese, president of the maquiladora association Index Mexicali, said in an interview, “LG is planning to manufacture new products at its Mexicali plant,” adding that “rehiring up to 400 former employees is under consideration.”
The Mexicali plant, which closed earlier this year, is reportedly undergoing renovation to install dedicated production lines for washers and dryers. Equipment deliveries are already underway. According to Maese, LG aims to begin trial production in the third quarter of this year, with full-scale mass production targeted for the end of the year. The company is also reportedly considering the recruitment of additional personnel through third-party contractors, potentially exceeding the plant’s previous staffing levels.
Analysts view the decision as a strategic one, leveraging Mexicali’s geographic proximity to the western U.S. market. Located near the U.S.-Mexico border, the plant offers significant advantages in reducing logistics costs and delivery times, enabling quicker response to local demand. Previously, LG produced U.S.-bound washing machines at its facilities in Changwon, South Korea, and Vietnam. However, in light of recent tariff changes and rising shipping costs, local manufacturing in Mexico is now seen as a more cost-effective and efficient alternative.
One remaining challenge is the legacy of the Trump-era tariff policy. As of June 23, the U.S. Department of Commerce imposed tariffs of up to 50% on certain steel-derived goods, including refrigerators, dryers, washing machines, dishwashers, and freezers. While the standard reciprocal tariff rate between countries is set at 25%, the steel used in these appliances is currently exempt. Originally set to expire on June 23, the tariff moratorium was extended until August 1, leaving room for change depending on the outcome of ongoing bilateral negotiations.
Meanwhile, the United States, Canada, and Mexico have begun renegotiating the United States-Mexico-Canada Agreement (USMCA), with revisions expected next year. Although appliances such as washing machines are generally exempt from tariffs under USMCA rules, the expansion of steel-related tariffs and country-specific U.S. trade policies have raised concerns that these exemptions may be limited going forward.
The impact of these tariff burdens is already visible in LG’s financial results. In its second-quarter earnings guidance released the previous day, LG reported consolidated revenue of $15.03 billion and operating profit of $463 million—a year-over-year decline of 4.4% and 46.6%, respectively. Analysts point to increased manufacturing costs for home appliances and televisions due to high U.S. tariffs as a key reason for the decline. Additionally, the one-time boost from inventory buildup in Q1 has faded, while higher logistics and marketing costs have further dampened demand.
Despite ongoing tariff uncertainties, LG’s move to resume operations at the Mexicali plant suggests the company believes Mexican production still offers a competitive edge in terms of cost, logistics, and responsiveness. Its proximity to customers in the western United States is also seen as a major advantage.
LG entered the Mexican market in 1988 and currently operates several manufacturing sites across the country, including in Mexicali, Reynosa, Monterrey, and Ramos Arizpe. These facilities produce a wide range of products, including televisions, refrigerators, and automotive components. Earlier this year, the company shut down the Mexicali plant and consolidated its production lines at the Reynosa facility, which serves as LG’s key strategic hub for North American exports, including to the U.S., Canada, Chile, Peru, and Panama.
However, LG Electronics clarified that no final decision has been made regarding the Mexicali plant. “We are reviewing various options for how to utilize the facility,” the company said in a statement.
