In case you are in the market for a washing machine, get ready to pay more for it. This is because Donald Trump quietly launched the first volley in the trade war between the United States, China and México. On Monday, while everyone was distracted with the government shutdown, Trump approved imposing safeguard tariffs on washing machines and solar cells. The punitive tariffs, sought by U.S. companies mainly target China and South Korea, but México was included in the melee because it exports both solar cells and washing machines to the U.S.
In the case of washing machines, Whirlpool had complained to the FTC in 2011, under what is known as a Section 201 complaint, that it could not compete with Samsung and LG washers. The country that exports the most washing machines to the U.S. is Vietnam. Vietnam is followed by Thailand and then by South Korea. México is fourth on the list. Although, Whirlpool’s target is LG and Samsung, both South Korean companies have been the subject of U.S. complaints about dumping washing machines in the U.S. for years. In response, the South Korean companies had moved manufacturing to México and then on to other Asian countries as the U.S. imposed punitive tariffs on them. Thus, Vietnam and Thailand have increased their washing machine exports to the U.S. over the years. México’s washing machine exports have declined, as a result. In 2017, Mexican washing machine imports decreased by $14.55 million. Of all washing machines imported in 2017, México was the source for about 14% of them.
Consequently, washing machine imports through El Paso has decreased as well, while imports have increased in Los Angeles and New York City. For El Paso, those are trade dollars the city coffers and residents are losing.
Under Trump’s order, the first 1.2 million residential washing machines imported into the US will have a 20% tariff added to them. (Anything over 1.2 million incurs a 50% tariff) In the case of México, the punitive tariffs include most of México’s washing machine exports to the U.S at the 20% rate because it only exports about 1 million units a year.
México exports the Electrolux washing machine brand to the U.S. Electrolux, based in Sweden, is the second largest appliance manufacturer in the world. Whirlpool is the largest. Electrolux sells about 40 million appliances each year. Electrolux is sold through Home Depot, Walmart and other retailers across the country. In April 2011, Electrolux ceased making washing machines in the U.S. and moved all its manufacturing to México.
At the minimum, expect to pay 20% more for that washing machine you have been eyeing. Although the protectionists want you to believe that punitive tariffs won’t affect you, the manufacturers pass on the tariffs to you, the purchaser. Manufactures do not absorb the additional costs.
Some of you may be tempted to believe that Whirlpool will now be more affordable to you. But you must remember that Whirlpool complained because it could not compete against LS, Samsung and Electrolux. Thus, there will be no savings to your wallets when it comes to washing machines.
Trump’s order imposes a 30% tariff on solar cells.
The U.S. Solar Energy Industries Association has decried the tariffs on solar cells, arguing that it will result in 23,000 U.S. jobs lost this year. So much for creating jobs.
Yesterday, the latest round of NAFTA talks resumed in Canada. Canada is upset about Trump tariffs recently imposed on some of its products and México just found out about the tariffs on its washing machines. Both, Canada and México are still dealing with the Trump insistence of increasing the domestic quotient in NAFTA cars that is not acceptable to Canada nor México. It looks like NAFTA will become another victim of Trump.
In response to the washing machines and solar cells tariffs, the Mexican government has said it will “use all available legal resources” to respond to the punitive tariffs. Meanwhile, while the trade war plays out, those of needing a new washing machine, better be prepared to pay an additional 20%.