Whirpool bitched to the Trump administration and the International Trade Commission about unfair pricing on Samsung and LG-brand washing machines.
The ITC panel ruled U.S. washing machine makers hurt by South Korean imports, so your price is guaranteed to go up.
The U.S. International Trade Commission on Thursday found that imports of large residential washing machines were harming domestic producers, in a major step the imposition of duties or quotas on foreign-made Samsung- and LG-brand washers.
The case, brought by U.S. appliance giant Whirlpool Corp, asked the ITC to recommend to President Donald Trump “global safeguard” restrictions on imported washing machines to stop South Korean rivals Samsung Electronics Co Ltd and LG Electronics Inc from flooding the U.S. market with cheap washers.
The commission, which voted 4-0 in finding that large residential washers were being imported in such quantities to create injury to domestic producers, will recommend remedies by Dec. 4 to Trump, who is expected to make a final decision by early next year.
Crony Capitalism
The ITC ruling will not save a single US job. But it will drive up costs on US consumers.
When corporations cannot compete, they bitch. They also pad the pockets of politicians so the politicians see things their way.
French economist Frédéric Bastiat wrote about this in 1845. I encourage everyone to read Bastiat’s famous Candlestick makers’ Petition.
The petition was a sarcastic proposal on behalf of candle makers and similar occupations to tax the sun for the unfair practice of providing free light.
Were it not for the sun, there would be more jobs for the manufacturers of Candles, Tapers, Lanterns, sticks, Street Lamps, Snuffers, and Extinguishers, and from Producers of Tallow, Oil, Resin, Alcohol, and Generally of Everything Connected with Lighting says Bastiat in his petition.
Let’s Tax the Sun and the Rain
Bastiat’s petition explains the folly of tariffs. Samsung is no more stealing jobs than is the sun.
Speaking of which, the US has massive sugar tariffs to protect the sugar lobby from “unfair competition” from countries that happen to have better-growing conditions for sugar cane because they get more sunlight and water.
Hmm. It seems we need to tax water for falling into Lake Superior and Lake Michigan instead of the desert where’s it’s badly needed.
Why should Illinois farmers get more rain than Arizona farmers? By tariff logic, we need to level out the playing field so that all corn farmers in Arizona and Greenland are not disadvantaged compared to Illinois.
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All this talk of “fair trade” is complete nonsense. The only “fair trade” is free trade.
Those who wish to understand the true source of escalating trade imbalances need look no further than Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold’s Honest Discipline Revisited.
Mike “Mish” Shedlock
Two competing thoughts here. Apologize if this comes off as a brain dump but it partially is.
First Samsung is a conglomerate and they may in fact be using other parts of their empire to subsidize costs and buy their way into the American market. I can’t find the details about the dumping and how it was determined that Samsung sold at below cost. I hope it wasn’t determined based on below Whirlpool’s cost.
Second , I bought a Whirlpool wine frig. The unit was so poorly designed it wouldn’t fit wine, or specifically anything out of Burgundy or Piedmont. It’s clear to me that the G.E.’s and Whirlpool’s are not innovating to the extent they should and in fact G.E. got out of the appliance business selling to the Chinese.
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If some guy at Samsung wants to buy you a washing machine, the appropriate response is: Thank You. Not childish, pseudo economic gibberish, aimed at making your cash strapped neighbor pay more for stuff he needs than he already does.
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Samsung/LG cost about the same as whirlpool, but they’re products are generally much better made.
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read the reviews, Samsung and LG are at the top of consumer reviews for consumer appliances across the board not just washers, not cheap but high quality and best value
american brands are slapping their names on cheapo chinese products
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Given that appliances are something that has not really been affected by inflation so far, go ahead and raise the prices. Maybe it’ll get the fed to its inflation target…
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Good point. My Maytag washing machine just broke after 26 years of loyal service. It would do a full load in a half-hour, max. I of course wanted to keep it going as long as possible so I asked the appliance repair guy who came out to service it (and who charged $45 to listen to it for 5 seconds and told me the transmission was shot and a replacement would cost about $300 plus 3 hours of labor bringing the total to about $500) about how to get a reliable machine since I’d heard that all the new ones were crap. He verified that, and said to stick with one that still had knobs on the panel and was rated as “analog” controls. So I found another Maytag that seemed to fit the bill. It cost $575. My old one I remember cost $450. I hope my new one lasts 25 years too, but I might not be around to find out….
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In all seriousness, lets tax non-profits based on their headcount… all these hurtful political action groups, the deadbeats in academia, religious organizations, everything. Sure they provide certain societal benefits, but so do paying jobs from regular companies (who also pay property taxes, income taxes, sales taxes, etc etc etc).
If you look at bankrupt Connecticut or Boston — its a lot of work for the media pundits to claim tax rates aren’t high enough already. But even deceased super-liberal Ted Kennedy admitted that Boston has too many tax exempt colleges, tax exempt hospitals, and tax exempt religious organizations. Indeed, tax exempt entities outnumbered tax paying entities by leaps and bounds.
Connecticut is bankrupt because the largest employers are the State of CT itself, UConn, Yale University, the Federal Government (sub base and Coast Guard), Columbia University Hospital system, the Roman Catholic Church, and a hodge podge of smaller universities (each of which has a payroll the size of Aetna or GE). During the last two or three decades, the tax exempt sector has grown 8-9x faster than the tax paying sector — which has now started to shrink, while the tax exempt sector continues to grow.
While China keeps growing its private sector — and their economy keeps growing leaps and bounds… the US keeps growing its tax exempt sector — and the US economy is struggling to even hit stall speed.
Washing machines are a tiny tiny tiny drop in the bucket. The ITC Commission cost taxpayers a lot more than this washing machine tax.
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PS — both Chicago and Puerto Rico are bankrupt because of the size of their corrupt government sectors, which in addition to the rampant corruption, are also bigger (headcount and aggregate payroll) than the tax base that is somehow supposed to support them.
Put a tariff on government headcount.
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Has anyone developed a “figure of merit” for Government that measures efficiency so Governments can be quickly compared or departments within Government easily compared?
Everything else gets measured.
Same with all the AI/Robotics talk.
Why not apply it to Gov and reduce headcount there too?
When was the last time anyone reduced Gov? If there was a little more insecurity there they might just start thinking clearly.
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“Has anyone developed a “figure of merit” for Government”
I have. The number is negative 42.
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Someone (James Dale Davidson?) wrote an article in the early 80s comparing the efficiency of the East German gov with that of the US.
Commies, $1 of output for $3.66 of input, the US, $1 of output for $3.50 of input. Sounds about right.
Thank goodness we live in the land of the free.
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Years ago Whirlpool bought Maytag. I loved my Maytag stackable but immediately phased out the Maytag in favor of their own unit. Long story short if my current unit breaks I would not buy Whirlpool, since they no longer make the larger stackable Maytag built. I will be forced to look at an import due to the American companies lack of attention to the marketplace.
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Mish how about subsidies to foreign producers from their gummints which our producers do not enjoy??
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What difference does it make?
If China gave us free washing machines and free cars we should take them.
Effectively, Chinese taxpayers would be subsidizing US consumers.
If its good for consumers it’s a good deal.
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This! 100% agree. If someone wants to sell steel below cost, then it makes sense to buy it. Over the long term the guy who sells below cost will fail anyway.
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precisely
Yet we keep hearing – well what if China gave it away for free
We would all benefit actually -except China
They can’t and they won’t
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I’ve often wondered why people can’t understand that.
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So, Russia. Under embargo’s and sanctions, what’s happened to their industries? Have all their washing machines broken? Do they run around in dirty rags?
Or maybe something else occurred?
One could say that importing more consumers is also a good deal, since it makes labor costs cheaper, lessening the prices consumers pay.
Or maybe not?
At this point in history the price(s) of durable goods are the only things subject to deflation, or are at least inflation neutral.
The non-monetary costs are far more significant, are socialized, and are far worse than paying $50 more for an imported washing machine once every 4 years.
Heck, I’m repairing mine this weekend.
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Russians are buying “made in Russia” and saving a ton of money by not importing. Also, the central bank is refusing to do QE etc. Russia’s doing fine, thank you very much!
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It seems that Russia is more in favor of free trade than that bastion of freedom, the US.
Add fake free-trader to our fakeness repertoire.
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…and intl banksterdom is furious and very afraid of any significant entity escaping its grasp. Dealing with Venezuela leaving the USD behind is relatively easy, but dealing with Russia is a whole different kettle of fish.
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That is a short-sighted view, Mish, based on a flawed model. The “free trade” model assumes that the workers who lose their jobs due to import competition will find other jobs (even better jobs), and that the businesses which lose their markets will be replaced by other businesses which produce higher valued goods & services, some of which will be exported. In the simple-minded “free trade” model, no country ever runs a long-term balance of trade deficit.
If we look at the declining workforce participation rate in the US and the unsustainable trade deficit, we have to accept that the free trade model is erroneous. Yes, some individuals benefit today from cheap imports, but reality shows they are externalizing the costs of their private benefits. It is another example of the “Tragedy of the Commons”.
Now, it may be that the better answer would be to cut US regulations & change tax policies which make it unprofitable to invest in new US job-providing businesses, rather than to impose tariffs. But it is intellectually unsupportable to defend “free trade” as currently practiced.
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nonsense
please refute Bastiat
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All that’s been happening for decades in the developed world is a lot of complaining about what’s lost.
Both peoples and leaders are clueless regarding adapting to the new reality. and there’s no improvement in sight. Hard times ahead…
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And if China one day decides to take them away?
Effectively, Chinese taxpayers would be subsidizing the destruction of US industries.
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“If China gave us free washing machines and free cars we should take them.”
That is nonsensical on more than one level. First, the US consumer doesn’t get it for free. Second, he doesn’t have a job (like making those machines, for instance) so he has to borrow money to buy even that crappy product.
There could be other aspects of nonsensicality as well. The above two are the obvious ones.
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That’s why the BAT disappeared, because cheap crap is the only consolation besides opioids for unemployed, penniless and debt laden folks.
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The price of washing machine hash will go up. Let the Fed put that in their pipe.
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The Maytag .. er, Whirlpool repairman rejoices …
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And Whirlpool manufactures cheap crap in Asia and ships it to Central America! Put that in your tariff hat!
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“Why should Illinois farmers get more rain than Arizona farmers? By tariff logic, we need to level out the playing field so that all corn farmers in Arizona and Greenland are not disadvantaged compared to Illinois.”
Study the history of the Colorado river for a real world example of the result of this sort of thinking.
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Across 300 million consumers, this will cause some to have to delay replacing a broken washer, for long enough that the slight loss of hygiene, will cause some children to get infected with something, and die.
Which is, of course, just another one of Bastiat’s unseen. Hence way beyond the capability for comprehension inherent to the undifferentiated mass of halfwits, that always and everywhere ends up making (inevitably wrongheaded) decisions affecting others; in progressive dystopias such as current day America.
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International commerce is coming to ahead,the turmoil is going to get much sharper, to much stuff is made all Nations are in the export game, it just can’t be done.
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I had a whirlpool washer. It was a total piece. I threw it out after having it for only 3 years. It technically still worked, but I had to constantly intervene in order to complete a wash cycle. And from searching the internet, I wasn’t alone. I replaced it with a similarly priced samsung washer. The Samsung is way better.
Samsung/LG washers don’t cost less than whirlpool/maytag ones. They’re just much better. Whirlpool’s problems are due to poor craftsmanship. Not price gouging from competitors.
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BTW they don’t make them like they used to. When we were first married I bought my wife a Maytag washer and dryer as a surprise gift for Valentines day, I know, how romantic. Anyway they lasted almost 30 years with no or minimal repairs. To this day she claims it was one of the better gifts I got her. My thought is that if a foreign company can compete with a cheaper and or better product so be it. However, if they are being subsidized unfairly to sell below cost it is unfair. I know life isn’t fair, but what happens if they put our only domestic appliance producer out of business and then start selling them at much higher prices than whirlpool did just because they now can. Wasn’t this the idea behind the trust busters earlier in 19th and 20th century because monopolies were predatory to legitimate competition?
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That’s why the BAT is dead, because it would hurt the consumer badly.
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Today’s trade imbalances couldn’t happen without the financialization that has ruined the economy for American workers. Asian banks are in the condition they are because of the export at all cost mentality. Of course they are going to be crushed when the next crisis hits, but for now the creative financing they use allows companies like Samsung and Hyundai to ship products to the other side of the world and still make a “profit.” But after the crisis, we will still need washing machines, so we better not get too reliant on subsidized imports.
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Onshoring will accellerate as automation does, but the jobs are gone forever.
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this is not just about washing machines but whole other industries. Little noticed by many Americans currently obsessed with an emotional debate as to whether it is acceptable for an NFL football player to kneel during the national anthem an important development is taking place in the rail equipment sector. It seems a Chinese company, CRRC is grabbing market share from everyone.
Again we see the power a company gains when it is supported, subsidized, or given an unfair advantage by its government. The bottom-line is that when China merged two large companies that made railroad equipment the goal was to end the competition between the two companies on foreign contracts. More about what we should learn from this in the article below.
http://brucewilds.blogspot.com/2017/09/mergers-hit-rail-equipment-sector-what.html
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Seeing as how the purchases I make, I make for my benefit and not necessarily for the benefit of the producer, I’ll buy American when I perceive that the value is there. If I see better value elsewhere, I’ll make the purchase that is most beneficial to me.
I have no problem purchasing other countries’ better, cheaper widgets. I think if governments would get out of the way, countries would quickly start producing that which they make better and cheaper than others. Keep some, export some, and import that which we can’t make economically. Seems like everyone productive would win. If you can’t be productive where you are, it’s time to move.
_aleph_
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Bingo!
And look at the clean energy failures of Obama
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Everyone is in favor of buy American except when it comes to their own pocketbook
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Yes, America should replace its inefficient populations with those who have more wage elastic tolerances and lower costs of living. Borders are anachronistic relics. People are fungible and should move. Population characteristics are completely interchangable.
Price is the only consideration, and cheaper is always better.
Or not.
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So, if cost goes up, Samsung profits will too,,,unless they now cancel these plans,,,
https://www.cnet.com/news/samsung-plans-380m-home-appliance-factory-in-south-carolina/
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Obviously, the protection racket is designed to create consumer price inflation, so there will be no opposition from the Fed. It’s just an endrun. One way or another, TPTB will devalue the debt.
Add the likelihood loopholes will be strategically placed in the legislation, ala the tariffs of the 80’s on foreign made pickup trucks. Parts were exempted, so Japanese manufacturers imported the cabs and chassis through one port, and the beds through another, and “assembled” them here.
It’s all dependent upon “who” gets “refreshments” handed to them to keep the skids greased. Gettin’ more like Mexico here everyday.
Little anecdote,,,I found myself in Mexico back in the 80’s on a break. I had bought a pair of Chinese sneakers before I went down. Ended up trading the $4 sneakers for a pair of $6 huaraches. Mexico had protection against imports, so imported goods obviously held a premium over local ones. Not sure the gumnut benefited much on that transaction, but the buyer and seller did ok.
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Let’s all remember to celebrate the Maryland “Rain Tax” passed into law in 2012…
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…and the TV tariffs of the early 80’s that ended up destroying the last domestic manufacturers. They ended up pricing themselves out of world markets.
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Just as FSP/Whirlpool will do in this charade. Unless, of course, they do the prudent thing and move all their operations overseas. Sumpn’ tells me the Chinese market is a bit bigger than the domestic one.
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Mish, excellent logic. You should run for congress. They could use someone with such forward thinking ideas.
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We have a new Samsung washer. When it wishes to attract our attention it plays Schubert’s Trout Quintet. We still grin.
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Forget about tariffs. If two goods have similar features and reliability, warranty, etc., but one is more expensive, most folks will opt for the lower priced good. To compete, the higher priced goods manufacture will need to build a better product. The lower priced goods manufacturer, competing on price, does not have that pressure, but if wise, would also continue to drive innovation.
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Whirlpool thus becomes ZOMBIFIED…and the existing jobs there become taxpayer-dependent ‘misallocations of capital’ instead of real, productive positions
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I have a very large family and went through an LG a Whirlpool and a Maytag front loader set from 1995-2005. All seemed engineered to last only for the 3 year warrantee period under heavy usage. Typically the plastic drive shaft broke at 3 1/2 years with replacement parts more expensive than a new unit. Bought a Miele set in 2005. It has not stopped working yet and if it does it has a 20 year warrantee. All the companies mentioned in this article need to be penalized for purposely filling the worlds waste disposable sites with tons of plastic garbage.
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Miele is German, right? Germany thrives with astrong Euro, because the world buys its high quality products no matter what the price, and just makes more money.
I drove a taxi for 8 years, and at the end I owned one. I bought a new Merc which was expensive, but that is one of few brands that can take the hard use year after year.
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A German friend claimed that his cousin worked for Bosch to make bearings that fail reliably for dishwashers and washer/dryers. It was the major innovation that this company needed in order to get more replacement orders. My experience with LG, Whirlpool and Maytag coupled with the performance of my sister’s Samsung tells me that all the main stream appliance makers spend a lot of money so their machines will self destruct. What is needed is not a tariff but a $500 disposal liability that is charged to the manufacturer if the machine goes to the dump within 10 years.
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Planned obsolescence.
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I think it must be noted that trade policy has massive long-term ramifications on the strength of a nation’s economy. Often people fail to note the difference between free and fair trade. In many ways, the global economy has become an ill-regulated business model tilted to favor big business and giant conglomerates. We should not lose sight of the fact that while free trade is important, fair trade is far more so and should be the main issue.
Developing a long-term sustainable economic system that is balanced would contribute to both global cohesion and the world economy. The article below is in response to a slew of comments from my recent article titled, “Higher Prices On Import Goods A Fair Cost For Jobs”. Today many people supporting past trade agreements mistakenly use low consumer prices as a battle flag around which to rally.
http://brucewilds.blogspot.com/2017/02/free-trade-and-fair-trade-are.html
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There is no bleeping difference
Fair Trade = Free Trade
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“Why should Illinois farmers get more rain than Arizona farmers? By tariff logic, we need to level out the playing field so that all corn farmers in Arizona and Greenland are not disadvantaged compared to Illinois.”
Irrigation and other water projects are federally subsidized in Arizona.
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If you’re crazy enough to farm in Greenland, that’s yor problem. Why does the govt let itself get blackmailed into wasring taxpaers’ money on subsidies? There’s plenty of unused farmland in Africa and Russia. Ever heard about Jim Rogers folks?
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In many states, rain is more than taxed: it’s illegal to collect rainwater on one’s own property, because the state claims ownership of it.
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Translation: The Corps which own the water works might lose a few pennies, and we can’t have that!
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All this talk of “fair trade” is complete nonsense. The only “fair trade” is free trade. Mish
A (the?) major reason the US has a big trade deficit is that the US Government provides welfare to foreign trade partners via positive yields on the inherently risk-free sovereign debt of the US that the US dollar may buy and non-negative interest on inherently risk-free US dollar demand accounts at the Federal Reserve beyond a, say, $250,000 individual US citizen exemption.
Eliminate that welfare and the US dollar shall then be far less desirable to foreigners except for buying US goods and services, paying US taxes and for buying non-sovereign US assets to the extent that should be allowed.
Then we might have far too little total (foreign + domestic) demand for the US dollar and experience severe inflation as foreigners dump their US dollars. But note that domestic demand for the US dollar is artificially low anyway since US citizens may not use it, except for grubby, unsafe, inconvenient physical fiat, aka “cash”. Remedy that situation and remove other privileges for the banks, etc. and we shall then have normal domestic demand for the US dollar to compensate for the elimination of abnormal foreign demand for the US dollar.
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We always hunt for the best prices. Seven years ago we bought a Whirlpool Cabrio 2 which has had breakdowns, replaced electronics etc. Recently it crapped out again and the repair man said it needed $500 parts and labor and he could not honestly say that would get more than six months out of it. It was simply done. We paid $1,200 for this pile of junk seven years ago. The lowest price we could find on it.
The repair guy said he gets the fewest repair calls on Samsung, so we included them in our search for a new washer. Long story short: the Samsung top of the line with everything including internet (I know, WTF?) and a steam cleaning area and all sorts of stuff including silver lined parts and tub was $700 something.
During our search we also discovered the one time lowest price $1,200 Whirlpool was now also $700. If the US manufacturers make better stuff again I will buy it. When GM makes something as good as Toyota or Subaru for the same price I’d buy it. That is all they have to do. Do a good job, not bitch and demand protection to continue being half-assed for almost twice the price.
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