The U.S. International Trade Commission (ITC) on Tuesday issued guidance for the imposition of a tariff-rate quota on imported washing machines, a remedy following the court’s ruling that Samsung, LG and other international manufacturers were hurting domestic washing machine makers through unfair trade practices.
Continue Reading Below
The ITC suggested a 50% tariff on imported washing machines, in line with the recommendation set forth by Whirlpool (WHR), which brought forth the initial complaint against its South Korean rivals, Samsung and LG, earlier this year. The 50% tariff would take effect if imports exceeded 1.2 million units in the first 3 years, and would be reduced to 40% thereafter. The ITC was conflicted over whether tariffs should be implemented if imports did not reach the 1.2 million threshold.
Meanwhile, seven lawmakers expressed concern in a letter to the ITC chair earlier this month that a 50% tariff could have a negative impact on “American jobs and American consumers.”
“It is our belief that the petitioner’s desired ‘remedies’ would jeopardize American manufacturing jobs and market innovation, and result in higher prices and fewer choices for American consumers,” the letter read.
At the heart of the issue for lawmakers is Samsung’s soon-to-open $380 million manufacturing facility in South Carolina, which is expected to produce washing machines for the U.S. market. Lawmakers, with vested interests in the project, believe, and Samsung executives said during congressional testimony last month, that import restrictions could “undermine competition in the marketplace” and “have a negative impact on our ramp-up and transition strategy for South Carolina.”
The plant is expected to begin making parts by January and to employ 1,000 Americans by the end of 2018.
Continue Reading Below
ADVERTISEMENT
“The Samsung appliance manufacturing facility … is precisely the type of investment that we as policymakers should encourage with our trade policies,” Congressman James Clyburn (D-S.C.) wrote in a separate letter. “The factory is expected to open soon, and I understand several of my constituents have already been hired. Thus, Samsung is already a part of our community in South Carolina … it is important that the Commission protect these workers as well as other interests.”
Additionally, LG Electronics, another plaintiff in the case, is set to open a new 1 million-square-foot manufacturing facility in Tennessee, which is expected to be completed by the first quarter of 2019.
Although Whirlpool has yet to issue its own comment in regards to the new recommendations, the company did say last month that “a robust remedy” would actually benefit investments at both companies’ U.S. plants because it encourages them to build all of their washing machines within the country.
On Oct. 5, the ITC voted unanimously in favor of Whirlpool, which brought a complaint forward accusing Samsung and LG Electronics, its South Korean competitors, of flooding U.S. markets with cheap washing machines and pricing out domestic manufacturers. While the ITC didn’t say material harm was coming from South Korea in particular, Whirlpool alleged the country’s manufacturers shifted production into other countries (Thailand and Vietnam) in order to avoid U.S. anti-dumping tariffs imposed in previous years.
The ITC’s recommendations will be sent to President Donald Trump, who will have two months to make a final decision.
