U.S. imposes tariffs on Samsung and LG’s washing machines

U.S. imposes tariffs on Samsung and LG’s washing machines. January. 24, 2018 08:12. by Gun-Huk Lee, Jeong-Hun Park gun@donga.com,sunshade@donga.com.

The United States announced safeguard measures on imports for the first time in 16 years, which will likely strike a blow to Korean manufacturers of washing machines and solar cells. Seoul plans to file a complaint with the World Trade Organization (WTO) against the U.S. decision.

U.S. Trade Representative (USTR) Robert Lighthizer said in a statement that “President Donald Trump has approved recommendations to impose safeguard tariffs on imported large residential washing machines and solar cells and modules.” This is the first time that Washington has approved safeguard measures since 2002, when it decided to impose increased tariffs on imports of foreign-made steel products.

The U.S. decision would slap heavy anti-dumping duties on imported washing machines manufactured outside the United States, including those produced by Samsung Electronics and LG Electronics. A 20 percent tariff will be applied this year on the first 1.2 million units of imported washing machines, which is a tariff-rate quota (TRQ), and a higher tariff on units exceeding the quota. The below-quota rate will go down to 18 percent in 2019 and 16 percent in 2020. For units exceeding the quota, the rate will go down to 45 percent and 40 percent in the second and third years, respectively. Given that Samsung and LG are the only foreign manufacturers of washers in the U.S. market, the safeguard measure is seen to be practically aimed at Korean washing machines.

Under the safeguard measures, the United States will also impose a 30 percent tariff on imported solar cells and modules from Korea and China in excess of 2.5 gigawatts (GW). The rate will go down from 30 percent to 15 percent for the next four years.

The USTR has not included an exceptional clause for Korean products in the measures. Initially, the U.S. International Trade Commission (ITC) recommended that washing machines manufactured in a country that has signed a free trade agreement with the United States should be excluded from safeguards. However, the USTR did not state the exclusion of Korean products, signaling the home appliances of Samsung and LG would be subject to the measures.

The Korean government has announced that it will file a petition with the WTO. Seoul also notified the WTO of its request for countervailing measures against Washington’s imposing of anti-dumping duties on washing machines made by Korean manufacturers, which was already ruled against by the WTO in 2013.

Seoul estimates that U.S.-imposed anti-dumping duties have caused damage of 711 million U.S. dollars (around 760.8 billion won). If the WTO approves the suspension of concessions, Korea can impose the tariffs on U.S. products corresponding their price.