President Trump won in 2016 in large part based on a promise to restore manufacturing jobs in the United States and crack down on the predatory exploitation of American workers by noted abusers of international trade law.
Two of the longest-running violators are the South Korea-based Samsung and LG Corporation, which are supported by massive subsidies from the South Korean government. In fact, Samsung received over $155 million directly, and millions more indirectly in tax breaks, in just 2012.
Furthermore, Samsung and LG engage in a rotating network of cheap labor, where they move their factories to a different country once they receive a penalty from U.S. regulators for their market-twisting practices coming from one country. Last year, this resulted in several Senators demanding greater action be taken to stop this serial abuse of U.S. trade law.
Together, these practices have resulted in the two corporations flooding the United States washing machine market for years to the detriment of American industry and workers.
Samsung and LG recently attempted to stem the growing public outrage at their actions by announcing that they were planning to invest in new jobs, facilities, and operations here in the United States.
However last month the U.S. International Trade Commission, a major government regulatory agency for international trade policy, released a report in which they stated they believe Samsung and LG have less incentive to follow through on those announcements, based in part on their recent major investments for production facilities in Thailand and Vietnam and continuing rotating violation of U.S. trade laws as before.
The report was the result of an investigation by the International Trade Commission over the past half-year where they were determining whether to implement a “global safeguard” action against Samsung and LG, based specifically on both corporations’ history of moving factories around the world to avoid the penalties resulting from their consistent breaking of U.S. trade laws.
In the report, the International Trade Commission described what they believed to be a significant anti-competitive injury done to the U.S. domestic washing machine market--washing machine imports to the U.S. that are priced significantly below market due to their subsidization and exploitative practices.
As a result, the International Trade Commission has recommended that President Trump and the Office of the U.S. Trade Representative implement a graduated tariff on imports of large residential washing machines over an annual threshold of 1.2 million units that begins at a 50% rate in the initial year and moves to 40% by the end of the third year.
International free trade only brings its benefits when companies are operating on a level playing field without economic manipulation. It is difficult for American companies to compete in the market when foreign companies receive such massive government support, which is why the International Trade Commission has recommended that our government begin cracking down on abusers such as Samsung and LG.
The only way to begin to push governments and corporations internationally, such as South Korea, to truly embrace a competitive free-market based international trade system is by refusing to allow them to gain by consistently breaking our trade rules and engaging in government subsidization.
In the process, not only has American industries been hurt, resulting in decreased competition and consequently less innovation and higher prices, but American manufacturing workers have seen less business investment, fewer jobs, and shrunken opportunities.
South Korea, with which we currently have a $19.806 billion trade deficit this year, is just one nation that engages in such trade abuses to the detriment of the American economy. The Trump Administration has made significant headway in attempting to, bit-by-bit, stop the serial abusing of our economy by those around the world who flout free market international trade principles and take advantage of our rules.
While the washing machine market is one of many, nonetheless the greater trend is that if we are not assertive in enforcing our trade laws and a level playing field, nations across the world will not hesitate in continuing to exploit our open market through massive government subsidization of their home industries and other exploitative practices which makes our businesses unable to compete.
The Trump Administration has a historic opportunity to continue to level the playing field of our international trade system and ensure that all participants are playing by the rules.
President Trump has already begun doing so, as manufacturing jobs have slowly begun to see an uptick during this past year with a growth of 138,000 as compared to a loss of 34,000 the year prior. Furthermore, many international trade agreements have begun seeing greater enforcement, such as with President Trump’s executive orders earlier this year ordering an increase in tariff collection and an examination of non-reciprocal trade practices.
By similarly following the International Trade Commission’s recommendation regarding the washing machine market and Samsung and LG’s abuses of it, President Trump can continue to support the revitalization of American manufacturing, a more level landscape for U.S. companies to compete on, greater product competition, more jobs for U.S. workers, and a real free-market based “America First” economic doctrine.