Air conditioning costs might escalate due to tariffsthis summer season.
Facing a Heat Wave Amid Soaring AC Prices
Summertime air conditioning might burn a hole in your wallet, thanks to several converging factors, one of them being President Donald Trump's trade war. "It's a rough time for needing a new HVAC system," said Scott Shelton, owner of Charlotte Comfort Systems in North Carolina.
Heating, ventilation, and air conditioning (HVAC) contractors have been dealing with higher costs since the post-pandemic recovery, due to surging labor, raw material, and refrigerant prices. With supply chains stretched globally, tariffs make it nearly impossible to avoid passing some of these higher costs onto customers. Shelton estimated his expenses have already jumped by 80% since the pandemic.
Shelton wasn't optimistic about the future. "It'll impact the lower and middle classes more than I've seen in my 38 years' experience in this industry," he warned of mounting costs.
U.S. manufacturers' prices for HVAC and refrigeration equipment hover near the history-making highs they reached last summer, before Trump secured his re-election. Some contractors assume Trump's tariffs will push these prices up even further.
A component costing $1,000 in March, for example, will now set you back $1,100, according to Aydin Mehr, who manages Denver-based UniColorado Heating and Cooling. By September, that same item could cost anywhere from $1,300 to $1,400.
To add insult to injury, residential electricity costs are forecast to average $784 this summer, up 6.2% from last year. This increase represents the highest level in 12 years and is due in part to the increased need for air conditioning. An early heat wave is already hitting the Southwest and Texas, with several cities breaking May temperature records.
Mehr expressed concerns about the summer to come. "We're stockpiling like crazy to keep our prices low as long as possible," he said, but his inventory is dwindling fast.
Analysts believe the HVAC sector is relatively well-positioned to withstand tariffs, including those on steel and aluminum. However, the industry still depends heavily on overseas suppliers, and many American importers have scaled back shipments, unsure which tariffs will persist.
Last year, the U.S. imported over $15 billion worth of air conditioners, roughly five times as much as it exported. Mexico and China, which currently face double-digit blanket tariffs, accounted for the largest shares of U.S. spending on AC imports, at 50% for Mexico and 19% for China. Analysts estimate less than half of Mexican-made HVAC equipment complies with the U.S.-Mexico-Canada Trade Agreement, a deal Trump signed during his first term.
Crucially, the industry is grappling with a shortage of R-454B, a more eco-friendly coolant that regulators installed in January under a bipartisan act Trump signed in 2020. Mehr was anticipating a shipment of heat pumps using R-454B in mid-April, but the parts from China necessary to finish the pumps are late. He foresaw the worst of the refrigerant shortage peaking around mid-June or early July, easing just as supplies of budget to midrange AC units may start to run dry.
If you're in the market for a new air conditioner, better start saving now. Or maybe start sweating.
- The increase in expenses for HVAC contractors due to higher labor, raw material, and refrigerant prices, coupled with the impact of tariffs, may make it challenging for many individuals, particularly from the lower and middle classes, to afford the ongoing investments in new air conditioning systems.
- The escalating costs of air conditioning equipment, exacerbated by tariffs, are causing concern among industry analysts, who believe the HVAC sector's reliance on overseas suppliers and the subsequent scaling back of shipments could potentially disrupt funding for new investments and purchases.
- In the context of the heat wave, soaring AC prices, and the ongoing shortage of eco-friendly coolant R-454B, sports events, outdoor activities, and other outdoor gatherings might feel the economic effects when people opt to stay indoors to avoid the heat, contributing to a potential drop in consumer spending during the summer months.
