Donald Trump made it clear, as a candidate for president, that he would pursue tougher trade policies including cracking down on those countries engaging in anti-competitive trades practices that result in heavily imbalanced trade deficits. In following through with a promised “America First” trade policy, it is time for the Trump Administration to take action regarding the sale of large residential washing machines, made by South Korean manufacturers Samsung and LG, in the United States.
The U.S. International Trade Commission (ITC) has found our domestic large residential washing machine (LRW) industry is harmed by the sale of less expensive and heavily subsidized imports from South Korea. For instance, the ITC report outlined findings that Whirlpool and GE have had to sell LRW at a loss to compete on price with the imports from Samsung and LG. The declining sales of LRW made in the U.S. caused unemployment in the industry.
The ITC proposed remedying this issue via a graduated tariff on large residential washing machines above 1.2 million units, per year, set at 50 percent the first year, 45 percent the second year, and 40 the third year. This proposal from the ITC awaits possible approval by the White House.
The United States currently has an annual trade deficit of more than $19 million with South Korea. Products made by Samsung and LG in South Korea benefit from generous subsidies from the government there. In 2012 alone, Samsung Group received more than $155 million in subsidies from the South Korean government. Subsidies give their products a substantial competitive advantage in the global market place against products made in countries that do not subsidize their industries.
Unless anti-competitive practices like that are not stopped, more American companies will move their manufacturing abroad, leading to few American manufacturing jobs and more products being imported into the United States. “For example, industry titans like Mondelez, Rexnord, and Brake Parts Inc. all recently moved their manufacturing operations from the U.S. to Mexico in order to take advantage of Mexico’s lower labor costs and comparatively lax regulatory regime,” the ITC report stated.
The ITC reported that Samsung and LG may not follow through with promised investments in manufacturing their products in the U.S. if they don’t face restriction on exporting their products to the U.S. It is far better for the U.S. economically if Samsung washing machines purchased by Americans are also made by American workers here in the U.S.
“We recognize that the communities where LG and Samsung are planning to operate new U.S. plants could eventually benefit from a shift in market share from Whirlpool and GE to LG and Samsung. In the absence of safeguard relief, however, LG and Samsung would have less of an economic incentive to follow through fully on their planned investments, particularly in light of their substantial recent investments in LRW production for the U.S. market in Thailand and Vietnam,” ITC stated in their report.
The sales of lower-cost subsidized washing machines made by Samsung and LG clearly is costing American jobs in this industry and it is quite reasonable and responsible for the Trump Administration to address this by accepting and implementing the recommendations of the ITC. President Trump campaigned promising to stand for American industries and jobs, and the tariffs against South Korean appliances recommended by the ITC need to be approved by the president.