In response to the implementation of a tariff on washing machine imports, both Samsung and LG announced price increases on their foreign-made appliances.
“As a result of the trade situation, we will be initiating pricing actions, which will be sent under separate cover shortly,” LG Home Appliances Executive VP Thomas Yoon said in a memo to LG’s retail partners. “Your LG sales representative will be in contact with you to review and confirm existing supply plans and develop plans for future promotions later in the year.”
A broader statement issued by LG called the decision to implement the hefty tariff on washing machine imports “misguided” and a “textbook case about how certain companies can game the process to use trade laws to try to accomplish what they can’t accomplish in the marketplace.”
Meanwhile, Samsung’s official statement called the tariff a “great loss for American consumers and workers. “This tariff is a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices,” the brief statement read.
Earlier this week, President Donald Trump approved tariffs on solar module and washing machine imports—the first such action by a sitting president since George W. Bush implemented a similar tariff for to protect steelmakers in 2002. These “safeguard” measures capitalize on the Trade Act of 1974 that permits companies to seek relief if they can prove “serious injury” from a sudden surge in imports.
Specifically with regard to the washing machine industry, the Trump administration said it would impose tariffs at a rate of 20 percent for the first 1.2 million units imported annually and up to 50 percent on additional imports beyond that limit, with those rates phasing out over the next three years. The Whirlpool Corporation filed the petition for the washing machine tariff. In a statement, company Chairman Jeff Fettig called the decision a major win for U.S. manufacturing jobs.
"This announcement caps nearly a decade of litigation and will result in new manufacturing jobs in Ohio, Kentucky, South Carolina and Tennessee," Fettig said in the statement. "This is a victory for American workers and consumers alike. By enforcing our existing trade laws, President Trump has ensured American workers will compete on a level playing field with their foreign counterparts, enabled new manufacturing jobs here in America and will usher in a new era of innovation for consumers everywhere."
The decision to implement this washing machine tariff now—after years of litigation, as Whirlpool points out—seems to be more about political posturing than anything. While the tariff is broad in that it would cover any washing machine imports from specified countries, it clearly is a swipe at LG and Samsung, both of which have dominated the appliances market here in the U.S. over the past several years.
But, while this tariff is now effectively in place, Samsung and LG are already months into putting themselves in a position where it will be a moot point. As we’ve covered in the past, LG and Samsung have planted their flags in the U.S. and are actively working to open manufacturing plants that will produce these very tariffed appliances. In fact, as Samsung pointed out in its statement, the first U.S.-made washing machines began production at the company’s new South Carolina facility on January 12th.
LG, for its part, broke ground on a Clarksville, Tennessee, plant last summer and is on track to start production of premium appliances during the fourth quarter of 2018.
All of this is to say that, while the intent of the tariff might've made sense several years ago, to implement it now feels like we're punishing someone for a mistake they're already working to correct. It's a bit late in the game to impose these "sanctions." Additionally, it's expected that the tariffs—of which, the Trump administration promised there would be more—face tremendous odds on the international stage. The World Trade Organization, which has seen similar U.S. tariffs imposed on six separate occasions, has deemed all previous safeguard attempts to be "improper." According to the Wall Street Journal, South Korean Trade Minister Kim Hyun-Chong said in a statement that he would file a complaint with the WTO, calling the measures "unfair" and "protectionist."