CASE Op-Ed: Whirlpool’s Protectionist Ways Will Only Hurt the U.S. Economy
Matthew Kandrach, CASE President
The holiday shopping season is here, replete with “Black Fridays,” “Cyber Mondays,” and plenty of other sale promotions. If you’re thinking about a washing machine, this might be the time to buy, because if Whirlpool gets its way, choices next year could be severely limited.
Whirlpool has repeatedly accused South Korean rivals Samsung and LG of dumping below-cost washing machines on the U.S. market, along with other trade violations. Whirlpool most recently, along with GE Appliances, asked a U.S. trade panel to impose a 50 percent tariff on large residential washers. Last year, the two companies – both of which, incidentally, are now owned by the Chinese corporation Haier Group – lobbied for import duties on Korean washer cabinets, tubs and other component parts.
Is Whirlpool really being unfairly injured by imported washers? Samsung and LG say no, this is nothing more than a backdoor strategy by Whirlpool to monopolize washer sales during the roughly two-year period the companies would be blocked out of the U.S. market, barring their new nearly 1,000-employee plants in South Carolina and Tennessee from being brought online.
Despite the direct loss of jobs, the Trump administration could be swayed by Whirlpool’s argument, even though the World Trade Organization has cleared Samsung and LG of similar charges leveled at them in the past. Protecting American companies and workers from unfair trade practices was a recurring theme for the Trump campaign, and it’s easy to imagine the Trump administration latching onto this as an opportunity to appear to “walk the walk,” when in reality it means American manufacturing jobs will be lost.
The fact of the matter is that protectionism rarely leads to improvements for U.S. companies, workers or consumers. Trade benefits all of them, and imposing tariffs and sanctions on foreign importers almost always results in higher prices, limited consumer choice and a diminished American economy.
In addition, foreign countries are likely to impose retaliatory restrictions on U.S. exports when their own goods are targeted, a serious consequence that puts at risk the 41 million American jobs that depend on export sales. The Bush administration found that out in 2001 when its decision to impose sanctions on steel imports drew retaliation and hurt U.S. manufacturers of steel-based products.
In the opinion of many industry observers, Whirlpool’s real problem is not unfair trade practices but rather a lack of vision and innovation. Samsung and LG, not Whirlpool, have led the appliance industry in incorporating new high-tech features into washers and introducing aesthetic design features that consumers have enthusiastically embraced. If not for competition in the marketplace, washing machines might still be the minimally functional white boxes that used to be shoppers’ only option.
Samsung and LG’s emphasis on design affects more than just appearance. The connected homes that more and more people are living in these days demand appliances that are tech-compatible. Starting a trade war with Korea could deny American families home appliance features and options that would make their lives easier and better.
To most people, Whirlpool’s claim that imported washers are causing it harm is more than a little suspect. Whirlpool claimed $5.5 billion in profits last year with washer sales of 9.7 million units, up 20 percent over 2013, and its CEO received a sizeable raise. It seems more likely that the company is trying to make its bottom line even fatter by manipulating a president who wants to be seen as tough on trade.
That’s not the way U.S. companies do business. We didn’t become the commercial leader of the world by throwing up barriers to trade; America is built on trade. The Trump administration should make that clear to Whirlpool by denying its requests for an unfair advantage over competitors, no matter where those competing companies call home.
Matthew Kandrach is president of CASE – Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.