The HVAC Industry Weathers Tariffs and Other Changes
The intense summer heat, which reached record levels in many parts of the U.S., hasn’t abated, and air conditioning is in high demand — for homes as well as commercial and industrial buildings.
Residential heating, ventilation and air conditioning (HVAC) equipment was largely hit with 25 percent tariffs this April before the Trump administration lowered them to 15 percent in June, at least temporarily. Last month, the U.S. Commerce Department proposed applying 25 percent tariffs on additional steel, aluminum and copper goods.
Whether or not the latest tariffs will impact HVAC, there has been a notable change in the industry recently: Air conditioning shipments from Mexico — typically a big HVAC producer — have underperformed the broader market, suggesting a relative “pickup” in U.S.-based production, says Alex Prudhomme, senior industrial analyst at data-driven research and analytics firm M Science.
“There has been evidence in our data that tariffs contributed to some companies relying more heavily on their U.S. plants during the second quarter,” he says.
Demand for commercial HVAC equipment is increasing, with one driver being an increase in data center construction. “A lot more capacity needs to get added” to meet this growing demand, Prudhomme says. “We've seen many of those companies add that capacity or make announcements for plants to be built in the U.S.”
For example, Mitsubishi has announced plans to establish a new company called MEHITS US Inc. (or Mitsubishi Electric Hydronics & IT Cooling Systems) to expand its IT cooling equipment production with a U.S. plant in Mason, Ohio.
Carrier Global in May 2025 said it would invest US$1 billion on domestic production within five years, and recently announced plans for a new U.S. facility expected to begin production of chillers and components in early 2027.
Mexico has been an important destination for HVAC manufacturing growth over the past five years, Prudhomme says.
“It’s historically been cheaper to produce in Mexico,” he adds. “But with so much uncertainty around tariffs, I think companies are thinking differently about supply-chain risk and deciding that it makes more sense to play it safe. They need this capacity and want greater certainty, which is making U.S. capacity more attractive.”
(Photo credit: Getty Images/Vchal)