SEOUL, Nov. 24 (Korea Bizwire) – The United States International Trade Commission (ITC) has recommended a 50 percent tariff rate on South Korean washing machine sold in the U.S. market, a move that could severely hamper sales for the likes of Samsung and LG.
The recommendation by the ITC is widely interpreted among South Korean electronics companies as a push for more localization and a production increase at U.S. manufacturing plants.
According to the ITC’s latest proposal, washing machines exported into the U.S. over the next three years will be hit with a 50 percent tariff when the trade volume surpasses 1.2 million units.
The new safeguard measure could deal a severe blow to both Samsung and LG, which export an estimated 2 million units each year.
Opinions varied among members of the U.S. trade panel on washing machine tariffs below the newly proposed export quota, with two options presented; a zero tariff rate, and a gradual tariff increase starting with 20 percent in the first year.
The ITC’s recommendation comes on the heels of U.S. manufacturer Whirlpool’s calls to impose a flat tariff rate of 50 percent on all washing machines made by its rivals Samsung and LG, and will be sent to President Donald Trump by early December.
Depending on Trump’s decision, industry experts believe the measure could hurt the South Korea manufacturers in the U.S. market, with between 800,000 and 1 million units expected to be hit with a 50 percent tariff rate.
Last year alone, Samsung and LG exported a total of $1 billion worth of residential washing machines to the U.S., accounting for 16 percent and 13 percent of the market, respectively.
“We continue to believe that no remedy is necessary since our South Carolina factory will begin producing washing machines in early 2018. We’ve already hired 350 people, who are preparing our factory for production in January, and we are on track to fill another 150 manufacturing jobs in South Carolina by the end of the year,” Samsung said in defense of its position in the U.S. washing machine industry.
LG is expected to open a new manufacturing plant in Tennessee as early as the end of next year, as part of efforts to raise U.S. domestic production and evade safeguard measures.
In the past, both Samsung and LG have argued that the safeguard could lead to a lack of consumer choice and price increases.
It has been reported that washing machines produced at LG’s Changwon plant will be exempt from the possible trade protection measure as stated in a previous ITC decision.