The Economist February 13th 2020 pp73 |Finance & economics|Trade policy in America “Rinse and Repeat” “What washing machine tell you about the links between tariffs and competition”
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Summary of the Article
Over the years Whirlpool, American maker of washer machines and dryers, has sought and been granted tariffs be employed against foreign competition the likes of Samsung and LG. The article points out that American companies are successful in gaining approval for about 6% of all tariff applications compared to about 4% for companies in the EU. In total Whirlpool, by some estimates, has received nearly ten years of protection with noticeable effects of lowering imports, at least temporarily, but also raising prices to consumers by about 12%. All the while Whirlpool continues requesting adjustments on an ongoing basis as foreign competitors dodged tariffs by changing country of manufacture repeatedly and ultimately relocating to Tennessee. These "foreign" competitors now argue that they are part of domestic production and should be exempt from tariffs. Regardless, the net effect is that currently 80% of washers and dryers for American are made here.
As a matter of education, there are three types of tariffs that when successfully pursued protect American companies from foreign competition. They are; anti-dumping when imports are sold below cost, countervailing duties for when foreign makers are subsidized by government and safeguard tariffs when imports are surging. The current tariffs, that were tacitly extended by Trump, will end in 2023 unless otherwise extended. Some argue that tariff policy hastened the movement of factories into American and others argue that protection led to consolidation of Maytag into Whirlpool. Try as you will with tariffs eventually competition is unavoidable.