Foreign makers of such products as washing machines and solar panels are ramping up shipments to the U.S. ahead of government decisions on whether to erect new barriers, trade data show.
[Andrew Tangle | January 3, 2018 | Wall Street Journal]
The influx of goods comes after companies including appliance giant Whirlpool Corp.WHR +0.44% and solar-panel maker Suniva Inc. asked the Trump administration in recent months to use powers under a controversial trade law that gives the president wide discretion on tariffs and quotas.
The two cases are among the early tests of President Donald Trump’s “America First” trade policy and his pledges to help U.S. manufacturers and factory workers.
Ships brought 9,063 containers’ worth of large residential washers to U.S. ports in November, more than double the previous year’s clip, a month after American regulators sided with Whirlpool in a dispute with South Korean rivals Samsung Electronics Co. and LG Electronics Inc., according to an analysis of customs and U.S. Census Bureau data from research firm Panjiva. Samsung and LG had a combined 35% share of the retail U.S. washer market last year, roughly equal to Whirlpool’s.
Myles Getlan, an attorney for Whirlpool, said recent import levels were a sign that competitors were stockpiling washers. “It has the potential to undermine the effectiveness of any remedy that the president could impose,” he said.
An LG spokesman said the potential for new trade barriers played a role in the company’s increased washer shipments but denied it was stockpiling. He said the company also weighed other factors including increasing demand, shifts in distribution and new retail opportunities. A spokeswoman said Samsung looked forward to “continuing to meet strong consumer demand for our premium washing machines.”
At the increased import rates, as much as six months’ worth of surplus washer inventory could arrive in the U.S. before any tariffs go into effect, Longbow Research analyst David MacGregor said.
It wasn’t clear how the import surge would affect retail prices of washing machines. Analysts predict tariffs on overseas manufacturers’ washers would eventually get passed on to consumers, but Freedonia Group analyst Kyle Peters said additional imports before new trade costs could postpone any price increases.
U.S. import volumes for solar panels and related products also more than doubled, to the equivalent of 12,379 shipping containers in November, compared with the previous year, Panjiva trade data show.
U.S. trade regulators in September agreed with Suniva and SolarWorld Americas Inc., two solar-panel makers with U.S. factories, that the domestic industry had been harmed by imports and later recommended tariffs.
Trade data offer a limited window into companies’ export decisions, which can be influenced by seasonality, demand and trade. But Panjiva trade analyst Christopher Rogers said manufacturers expecting new trade barriers often boost shipments and “there hasn’t been anything put in place saying you can’t do this.”
Their attitude, he said, is: “Let’s get while the getting is good.”
The imports come amid a continuing debate over free trade and protectionism. Opponents of new tariffs and other trade barriers argue they distort open markets and are harmful to consumers, while many U.S.-based companies and workers say they protect domestic industries and jobs. Companies that support additional trade barriers say the rise of imports could undercut new protections they claim they need to fend off harmful foreign competition.
Mr. Trump has until early 2018 deadlines to make decisions on potential trade barriers in the cases involving washers and solar panels as well as two separate ones involving steel and aluminum. After receiving recommendations from trade regulators, the president has wide latitude to decide whether to impose restrictions and what type.
Whirlpool, the Michigan-based appliance company, and solar-panel makers with U.S. factories are seeking protection under a 1970s-era provision known as the safeguard law, claiming their businesses have suffered serious injury from imports, not from unfair trade. The U.S. hasn’t imposed tariffs under the law since 2002.
Members of the U.S. International Trade Commission in November issued recommendations to the Trump administration that include tariffs of up to 50% on imported washers exceeding a quota of 1.2 million units annually. The U.S. imported 10.3 million washing machines of all types in the 12 months ending Oct. 31, Panjiva trade data show.
The office of U.S. Trade Representative Robert Lighthizer held a hearing on Whirlpool’s case Wednesday and a decision by Mr. Trump is expected by Feb. 2. Decisions in the other trade cases are expected early this year.
Trade data show U.S. imports of LG washers were down 9% in November compared with the previous year, but nearly triple the level the month before trade regulators ruled for Whirlpool.
U.S. imports of Samsung washers were up 52% year over year, trade data show. November’s imports were up 40% from September, the month before the trade commission’s decision finding domestic washer makers had been injured.
LG and Samsumg, both of South Korea, say they have won over American consumers with sleek designs and innovative features, gaining U.S. market share through fair competition. Both companies plan to open factories in the U.S. this year.
Solar-panel makers are seeking their own safeguard protection. Tim Brightbill, an attorney for SolarWorld Americas, said the import increase highlighted the need for broad protections that foreign companies couldn’t circumvent. “When the president proclaims relief, it needs to be as comprehensive as possible,” Mr. Brightbill said.
The Solar Energy Industries Association, whose members include American buyers of solar panels, has opposed the protection sought by SolarWorld and its ally Suniva, which has sought bankruptcy protection amid a glut of low-cost imported solar panels. It argues the U.S. energy industry could suffer if tariffs push up prices on solar panels.
The solar panel makers “continue to build their case on the premise that they are entitled to a U.S. government bailout because of their abject and numerous failures as manufacturers,” an association spokesman said. Suniva’s parent is based in Hong Kong, SolarWorld’s in Germany.
A Suniva spokesman said: “Evidence of stockpiling proves that China and its proxies will always game the system at every turn and reinforces why the only solution to prevent China’s cheating is for President Trump to provide a remedy strong, long and effective enough to cause American factories to reopen and rehire.”
The Trump administration, meanwhile, announced in April it would investigate whether to limit steel and aluminum imports on national security grounds.
Trade data show the U.S. imported $2.4 billion worth of steel in October, up 37% from the previous year, and $1.9 billion worth of aluminum that month, up 26%.
The increase has fueled U.S. steelmakers’ calls for tariffs amid a rebound in steel prices globally and demand for American steel. The U.S. aluminum industry has complained of excess capacity and unfair trade practices by foreign producers.