Damage to US Customers

A Samsung Electronics home appliance factory in Newberry, South Carolina.
A Samsung Electronics home appliance factory in Newberry, South Carolina.

 

On October 19 (local time), it was accentuated that US consumers will suffer damage when a safeguard took effect and Samsung Electronics and LG Electronics both were building washing machine factories in the US in a public hearing about a safeguard on home washing machines held by the ITC (International Trade Commission) in Washington, DC of the US. In particular, some officials of the government of states in which the factories will be built strongly supported Samsung Electronics and LG Electronics and clarified their position against the safeguard.

According to the home appliance industry on October 20, Samsung Electronics and LG Electronics emphasized the safeguard’s adverse effects on the US industry and consumers in the safeguard hearing.

"If the US government blocks washing machine importation, Whirlpool will have huge market control," said John Herrington, vice president of Samsung Electronics USA. “Washing machine prices will go up and consumers will be given fewer choices." said the vice president about negatives effects from the safeguard. "If customs duties are added to import washing machines, it may bring a halt to the sound growth of the washing machine industry. This may deal a huge blow to retailers who are benefiting from market expansion."

Herrington also stressed that US consumers were entitled to enjoy an opportunity to access innovative products. "If the safeguard is triggered, it will seriously negatively affect sales of Samsung FlexWash Washer, an innovative product," Herrington said. "This kind of thing should not be played out in the United States. Samsung Electronics is not planning to produce FlexWash right away in the US for many reasons. Restricting the import of washing machines will make it difficult for US consumers to buy or come by FlexWash Washers."

John Riddle in charge of HA sales and John Toohey in charge of strategy at LG Electronics USA, and law firm Curtis made statements as representatives of LG Electronics. They also zoomed in on damage to US consumers. "The reason LG has been growing in the United States is that distributors and consumers of the US have chosen LG washing machines that has the strongest competitiveness in the world." If the safeguard goes into force and prevents washing machines from being imported, the final damage will be done to US distributors and consumers."

Officials from South Carolina and Tennessee where Samsung Electronics and LG Electronics are building new home appliance factories, expressed concerns about the effectuation of the safeguard, emphasizing the positive effects of the two companies' investments.

"If Samsung Electronics can not afford to offer a variety of innovative products to consumers, consumers will be seriously damaged," said Ralph Norman, South Carolina's member of the House of Representatives. “If the safeguard disables Samsung Electronics USA from importing enough washing machines to satisfy demand of next year, it may cut demand for washing machines to be produced in new factories in the US in the future. This will not only reduce the choices of consumption, but also result in consumers’ paying higher prices. If prices go up and demand falls, the manufacturing industry’s employment will inevitably shrink."

It also warned that the impact of these measures could dampen US investment sentiment among companies. "The remedy seems to weaken Samsung's investment base in the United States," Ralph Norman said. "What message will be sent to companies that are going to invest in the United States (when SafeGuard is triggered)?"

Bob Rolfd, commissioner of the Tennessee Department of Economic and Community Development, expressed his support for LG Electronics’s claim. LG Electronics claimed that LG Electronics should be treated as a producer in the United States because the washing machine plant in Tennessee strengthens the foundation for the washing machine industry in the United States. Therefore, Rolfd asserted that the safeguard was unnecessary.

In addition, LG Electronics emphasizes that the company is planning to invest US$ 250 million in the construction of its US washing machine factory by the first quarter of 2019 and it will employ more than 600 workers after the completion of the factory. The company explained that the investment will have an impact on related industries in addition to job creation, tax payment, and procurement of local parts, thereby contributing to local economic development.

Prior to a public hearing, Whirlpool demanded that the US government lay high tariffs on Samsung and LG washing machines and components for them for three years (50% in the first year, 49% in the second year and 48% in the third year and an import quota for components (three-year average volume). On November 21, the ITC will decide the level of remedy measures based on discussions on the day's hearing and then submit a report to US President Donald Trump on December 4. If Trump's approval comes within 60 days, the safeguard may be triggered.

 

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