Aluminum tariff is a political stunt from Trump: Former U.S. ambassador to Canada
resident Donald Trump said tariffs he imposed to help Whirlpool Corp. resulted in more jobs -- but studies show those jobs came at a steep price to consumers.
While the tariffs helped create jobs in the U.S., they cost American consumers via higher prices, the government’s own International Trade Commission found in an August 2019 report.
Whirlpool, based in Benton Harbor, Michigan, asked for the tariff, saying that its South Korean rivals illegally undercut prices on washing machines. Trump responded in 2018 by imposing tariffs of up to 50 per cent on large washing machines imported over a quota of 1.2 million a quarter.
“I proudly signed the order to impose a 50 per cent tariff on all foreign-made washing machines,” Trump said during a visit to a Whirlpool factory in Clyde, Ohio, on Thursday, where the company makes 20,000 washers a day. “As a result, Whirlpool’s nine factories across the United States were soon thriving like never before.”
Trump, who is running behind Democrat Joe Biden in polls, is trying to make the case that he should be re-elected in November because he knows how to create jobs -- and that his approach will help the U.S. recover from a recession caused by the coronavirus pandemic.
But it’s not clear how much the tariffs helped the U.S. Most economists argue that tariffs can be effective at limiting imports and competition for domestic producers. But they say that comes at a cost to the overall economy and consumers in particular.
In its review of the washing machine tariffs, published last year, the ITC cited an April 2019 paper by economists at the Federal Reserve and the University of Chicago that found the tariffs had contributed to the creation of roughly 1,800 jobs, 200 of them at Whirlpool.
Based on a 12 per cent increase in the price of washers -- or about US$86 per machine -- each the 1,800 jobs created cost American consumers US$815,000, that paper found.
The ITC said Whirlpool disputed that figure and argued in its response to questions by the commission that the true cost to consumers of each job “was between US$14,623 and US$21,723.”
The levies also contributed to lower demand for washing machines, according to the ITC.
The economists’ study found that the annual cost to consumers of higher washer prices amounted to US$1.5 billion versus the US$82 million annually in tariff revenue collected.
The ITC said it had found that two other Trump trade actions -- tariff increases on steel and aluminum and his taxes on imports from China -- had also added to higher costs for domestic producers of washing machines like Whirlpool.
Trump also announced at the Whirlpool plant that he would reimpose tariffs on Canadian aluminum -- something that has hurt the appliance maker in the past.
Steel prices surged in 2018 after Trump implemented a 25 per cent tariff on imports and a 10 per cent tariff on aluminum. In the first quarter of that year, the rising costs hit Whirlpool’s North American and European results by US$25 million.
Whirlpool last month reported second quarter net sales of US$4 billion, down from US$5.2 billion in the same period a year earlier but stronger than predicted, something executives attributed to strong demand from people spending more time in their kitchens during the pandemic.
The company reported that it has been having trouble producing enough products to meet the increased demand, due in part to factory slowdowns caused by coronavirus-related workplace safety measures like social distancing.
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