What do you think? Leave a respectful comment.

Will Trump’s tariffs help U.S. workers? It could be a wash

A decade ago, Whirlpool controlled about half of the domestic washing machine market. But when things started going downhill, the company blamed unfair competition from foreign companies. In January, President Trump announced a big new tax on foreign washers. What does it mean for consumers and American workers? Special correspondent Catherine Rampell, a Washington Post columnist, reports.

Read the Full Transcript

  • Judy Woodruff:

    As we have seen, much of the president's agenda this year is focused on trade.

    Tomorrow, Mr. Trump is expected to announce more changes to tariffs he is imposing on China. The full brunt of these recent moves have yet to kick in.

    But there is already fallout with some of these tariffs. Take the case of the American-manufactured washing machine and explore what tariffs have meant for workers, companies and consumers.

    That is the focus of tonight's Making Sense report from special correspondent Catherine Rampell. She is a columnist for The Washington Post.

  • Stephen Clapp:

    Family's been in Clyde, Ohio, for about four generations. And this bank here on this corner, my great-grandfather was president of.

  • Catherine Rampell:

    Stephen Clapp's great-grandpa may have run the People's Banking Company, but for the last 70 years, pretty much everyone else in his family has had a different employer, Whirlpool.

  • Stephen Clapp:

    The way I got the job in the first place was, my dad worked here.

  • Catherine Rampell:

    That was more than half-a-century ago, interrupted only by his service in Vietnam.

  • Stephen Clapp:

    My wife's worked here. Two sisters have worked here, two brothers, my daughter. My son just recently got hired in. If you put into my cousins and uncles and aunts that have worked here, you're looking at probably 300 years of accumulated seniority.

  • Catherine Rampell:

    Wow, 300 years. That is a lot of family devotion to one firm.

  • Stephen Clapp:

    It is.

  • Catherine Rampell:

    And a lot of company devotion to one town.

    Whirlpool's Clyde plant, about an hour west of Cleveland, is the world's largest washing machine factory. And workers here hope to benefit from President Trump's recent sweeping tariff aimed to shield them, at least temporarily, from foreign competition.

    Just a decade ago, Whirlpool, which also owns Maytag, controlled about half of the domestic washer market, but then things started going downhill.

  • Soumaya Keynes:

    In the early 2010s, there was a very sharp increase in washing machine imports from two companies, Samsung and LG, and they're all coming from South Korea.

    You are listening to an episode of trade talks.

  • Catherine Rampell:

    Economists and podcast partners Soumaya Keynes and Chad Bown specialize in trade.

  • Soumaya Keynes:

    And Whirlpool, this mega company, essentially started claiming that this competition was unfair.

  • Catherine Rampell:

    So, what does unfair actually mean in the context of trade?

  • Chad Bown:

    Unfair can either mean subsidized, so the companies are getting direct funding from the government that you're not supposed to do under the international rules, or it can mean that the companies are selling their washing machines in this case at a price in the U.S. market that's somehow defined as too low, lower than their cost of production, or maybe lower than the prices that they're charging for the same washing machines back at home.

  • Aaron Spira:

    Our washer business was losing money, hundreds of millions of dollars.

  • Catherine Rampell:

    Aaron Spira is Whirlpool's chief legal officer.

  • Aaron Spira:

    So in response to the unlawful actions by Samsung and LG, we're faced with a choice. Either don't sell a product because it's unprofitable to do so, thereby losing market share, or sell at a loss.

  • Catherine Rampell:

    Now, Samsung and LG, Whirlpool's main competitors, flat out deny playing dirty.

  • John Taylor:

    We do not dump our washing machines in the United States.

  • Megan Pollock:

    When it comes to U.S. trade policy and the rules, we comply 100 percent.

  • Catherine Rampell:

    Instead, say the spokespeople for both Samsung and LG, they have been gaining on Whirlpool by making a better, more innovative product.

  • John Taylor:

    We're the first to use steam technology in washing machines.

  • Megan Pollock:

    We have come out with machines that can do two loads at the same time. `John Taylor: We're leading the way with connected appliances.

  • Megan Pollock:

    We invented add-wash, which seems like a very simple concept. How did no one think of this before?

  • Sara Morrow:

    So you could open it and toss in a sock.

  • Megan Pollock:

    It's like a top-secret door, yes?

  • Sara Morrow:

    Which our engineers found to — it did have some utility.

  • Catherine Rampell:

    Were the Korean products actually better? We went to the experts at "Consumer Reports" to find out. Every day at their lab in Yonkers, New York, washers are put through the wringer in highly controlled experiments.

  • Jim Nanni:

    Laundry is weighed, detergent measured to the gram, and added to each load are fabric swatches that test how rough each model is on clothes.

    A particularly aggressive machine would show a lot of loose threads.

  • Catherine Rampell:

    And how well it cleans.

    Engineer Jim Nanni.

  • Jim Nanni:

    We use five different soils that are placed in the load. And then, when they are finished, we dry them and then take a color reading on a laboratory instrument.

  • Catherine Rampell:

    So I understand wine, cocoa, blood and carbon, but what is sebum?

  • Jim Nanni:

    Think of it as ring around the collar.

  • Catherine Rampell:

    And how is it produced? How do they obtain it?

  • Jim Nanni:

    I don't want to know.

  • Catherine Rampell:

    So who's the best? Well, it depends on which kind of machine, says "Consumer Reports" editor Sara Morrow.

  • Sara Morrow:

    In the front-loader market, we have seen LG and Samsung sort of going back and forth with releasing new features and innovating further and further.

    With top-loaders, we see Maytag and Whirlpool innovating by getting bigger and bigger and bigger over time.

  • Catherine Rampell:

    But Whirlpool's share of the overall market has been getting smaller and smaller, down from half to just over a third.

    Whirlpool blames unfair competition from Samsung and LG. And U.S. regulators have agreed repeatedly. In a 2013 decision, they slapped a tariff on washers made in South Korea.

  • Aaron Spira:

    And before the order could go into effect, rather than comply with the U.S. government orders, LG and Samsung moved their production to China.

  • Catherine Rampell:

    2017, another Whirlpool complaint, another tariff, this time against washers made in China.

  • Aaron Spira:

    And, this time, they moved to Thailand and Vietnam.

  • Soumaya Keynes:

    You have got trade in this case being a bit like water. So, you're trying to plug one leak in one place, and it's just coming up in a different one.

  • Catherine Rampell:

    For their parts, LG and Samsung deny that decisions about factory locations were driven by tariffs. But even if they were, says economist Chad Bown, so what?

  • Chad Bown:

    It's very normal and completely legal. It may be, in fact, evidence that the company is just selling a product that consumers really, really want to buy and that they are really good at producing it.

  • Catherine Rampell:

    Now, those two earlier rounds of tariffs were under President Obama.

    Then came Donald Trump, with his tough-on-trade platform. And the county where Whirlpool's washer plant sits, which had gone for Obama twice, went for Trump by 23 points. So Whirlpool made a bold move. It asked the Trump administration to impose washer tariffs worldwide by invoking a rarely used piece of trade law.

    And, unlike the earlier complaints, Whirlpool wouldn't have to prove that LG and Samsung had done anything illegal or even unfair.

  • Chad Bown:

    All you have to show is that the imports coming in from the world are coming in, and it's hurting the domestic company.

  • Catherine Rampell:

    The U.S. International Trade Commission agreed, and, in January, Trump announced a big new tax on foreign washers.

  • President Donald Trump:

    A big industry. A lot bigger than people would understand.

  • Sara Morrow:

    For this first year, any company importing washing machines to the U.S. is hit with a 20 percent tariff for the first 1.2 million machines that they bring in. Now, any subsequent washing machines they bring in after that 1.2 million mark are hit with a 50 percent tariff. So it is pretty steep.

  • Catherine Rampell:

    And, sure enough, prices are going up. A lot. So far this spring, they have spiked 17 percent. And it's not just foreign washers that are more expensive now. Whirlpool has raised prices, too. It blames higher costs.

    But, as Soumaya Keynes points out-

  • Soumaya Keynes:

    The whole point of this tariff is to give the domestic industry relief. So, if it works, then Whirlpool is supposed to be able to increase their prices and profits. The whole point is that they have been injured by this foreign competition and this is supposed to let them get back to financial strength.

  • Catherine Rampell:

    So, if prices go up, it's a feature, not a bug?

  • Soumaya Keynes:

    Yes.

  • Chad Bown:

    But it means consumers are worse off, because they're now paying more.

  • Catherine Rampell:

    At ABW Appliances outside Washington, D.C., showroom manager Chris Hemmingsen says his customers may not mind.

  • Chris Hemmingsen:

    After the last 10 years of the downturn of not purchasing a lot of things, they really want what they want. And $30 to $50, maybe $100 doesn't really change their opinion on things.

    I don't think that people would mind paying a little bit more if they knew that American jobs are being created, and, hopefully, it was paying somebody's salary.

  • Catherine Rampell:

    In fact, Whirlpool has already hired 200 new workers in Clyde.

    Plus, Samsung has just created 650 new jobs in South Carolina, and LG will soon add 600 in Tennessee.

  • John Taylor:

    We're doing exactly what President Trump wants to do. We're investing in America and we're creating jobs.

  • Catherine Rampell:

    By making washers in the U.S., they can avoid those pesky tariffs. They have also cashed in on all the ways that states and counties woo new plants and new jobs these days, with generous grants, tax credits, and other goodies.

    Does the Clyde plant receive any similar public subsidies?

  • Aaron Spira:

    The state of Ohio has been a great partner for Whirlpool for many years, but I don't believe we have received support in the neighborhood of what you were listing for Samsung and LG.

  • Catherine Rampell:

    Which means Samsung and LG may enjoy the exact same kind of advantages, government subsidies, here in the U.S. that Whirlpool accused them of getting back in Korea.

    Trump's attempts to help American companies and workers through tough trade measures could backfire for other reasons. His steel and aluminum tariffs have sharply raised the cost of making washers.

  • Aaron Spira:

    It's a meaningful percentage of the products. So, we will have to do our best to offset those costs.

  • Catherine Rampell:

    And other countries are fighting back with a laundry list of American products they plan to slap their own tariffs on.

    One product that the European Union and Canada are both targeting? American-made washing machines.

    So, will the president's tariffs actually help or hurt American workers? It could be a wash.

    For the "PBS NewsHour," I'm Catherine Rampell, reporting from Ohio and New York.

Listen to this Segment

The Latest