Cronyistic actions are pushing good-paying jobs out of the U.S.
“America First” apparently isn’t supposed to apply to American workers who don’t work for an American company. At least, it’s hard not to reach that conclusion based on recent events surrounding washing machine manufacturer Whirlpool’s complaint to the United States International Trade Commission (ITC). In agreeing to protect an American company from competition, the ITC is going to end up punishing Americans who work for Whirlpool’s foreign competitors.
Whirlpool’s case relies on a little-used provision known as “Section 201.” Section 201 allows domestic businesses that can demonstrate “serious injury” from foreign imports to petition for temporary tariff protection. As David Williams of the Taxpayers Protection Alliance points out, “Never has Section 201 been used — nor was it intended — to target specific competitors as the Whirlpool petition does.”
Whirlpool claims that imports from competitors LG and Samsung are harming its business, describing imports from those companies as “unexpected.” Ironically, ten years ago, when Whirlpool wanted to merge with Maytag, it defended the merger on the basis that competition would still remain due to imports from LG and Samsung.
Despite Whirlpool’s arguments being the corporate equivalent of a child who wants dessert but not to clean his room, the ITC sided with Whirlpool and is now considering which “remedies” to impose. Whirlpool, for its part, suggests a prohibitively high 50 percent tariff on washing machine imports from LG and Samsung.
Implementing this tariff, even in a temporary manner, would harm opportunities for thousands of American workers. Samsung is already in the process of building a washing machine factory in South Carolina, expected to employ nearly 1,000 American workers. LG is constructing a factory in Clarksville, Tennessee, which would employ 600 workers, and has plans to develop in New Jersey and Michigan. The ITC is threatening these jobs in the name of protecting an anticompetitive business.
The economic harm would extend beyond the workers expected to be hired by LG and Samsung. Washing machines are a staple of nearly all American households, but they are not cheap. Restricting competition by forcing major players out of the U.S. market would drive washing machine prices up for individuals and families around the country.
Of course, the issue is far broader than simply a threat to the washing machine industry. Rare as Section 201 complaints are, this marks the second major case under the Trump administration to petition for Section 201 protection — solar panel manufacturer Suniva made the same claim earlier this year. Suniva was also successful, and is also awaiting a “remedy.”
The last time a Section 201 complaint was successfully registered was in 2001 under President George W. Bush, when 30 percent tariffs were placed on steel imports. The effect was devastating — steel prices spiked by 30-50 percent, nearly 200,000 Americans lost their jobs, and downstream industries suffered from a steel shortage. Should companies like Whirlpool or Suniva continue to be successful with Section 201 cases, a fallout like that which resulted from the 2001 steel tariffs could become the new normal across many industries.
Whirlpool appears to be jumping on the bandwagon of corporations using their domestic ties to target foreign competitors, much as Boeing did a month ago. Anticompetitive behavior of this sort shouldn’t be encouraged by agencies such as the ITC, but discouraged.