The US Donald Trump administration’s trade retaliation taking aim at Korea went over the line. The administration is putting pressure on Korean companies by beginning pinpointing trade retaliation to protect US companies such as imposing anti-dumping duties on Korean steel products and taking safeguard measures for electric household appliances while demanding a change in trade terms to make the terms unilaterally advantageous to the US.
The US International Trade Commission (ITC) issued a recommendation for a safeguard measure that imposes a 50% tariff on import washers of Samsung and LG Electronics that exceed more than 1.2 million units per year on November 21 (local time).
The gist of the recommendation is the Tariff Rate Quota (TRQ) System that imposes a tariff of 50% on exceeding volume for the first year and a tariff of 45% on exceeding volume for the second year and a 40% tariff on exceeding volume for the third year for the next three years.
If the safeguard is triggered, the safeguard will be taken in only 16 years since President George W. Bush initiated a safeguard on Korea's steel products in 2002.
"Excellent quality and strong price competitiveness have been driving up sales of Korean washing machines in the US," a Korean government official said, adding, “US appliance makers such as Whirlpool should address this problem by increasing their competitiveness. But the US administration is retaliating against Korean companies with a safeguard.”
It was known that ITC members were divided over levying tariffs on less than 1.2 million Korean washers so the ITC prepared two recommendations –- one in favor of imposing tariffs and the other against them.
Trump will decide to launch the safeguard and finally decide its level until February of next year, which is 60 days from the ITC's report date scheduled for December 4. If the tariff is extended to touch less than 1.2 million units, Korean home appliance companies will face the worst situation where they have to give up the US washer market.
"Only the safeguard measure decided today will incur a total of US$1 billion in damages to Samsung Electronics and LG Electronics," a Korean washer industry official said. “President Trump, who has put ‘the US comes first’ policies front and center, is likely to expand safeguard measures to cover less than 1.2 million units."
US President Trump has been retaliating against Korea while targeting sectors where US companies are weak by making use of import regulating measures such as anti-dumping and countervailing duties and safeguards since his inauguration early this year.
According to the Korea International Trade Association (KITA), the US launched an investigation of Korea regarding anti-dumping and countervailing duties from 1994 to 2014 two or less times a year, but this year, the number has already quadrupled to eight cases from January to October this year.
"The US launched an anti-dumping investigation of Korean textile products, which had not been implemented for a while and an anti-dumping lawsuit was filed against ball bearing products for the first time by the US," said Je Hyun-jeong of the Trade Cooperation Office at the KITA. “In order to protect the American industry, the US is abusing anti-dumping and countervailing duties and safeguards."