A Whirlpool Bailout Hurts Consumers And Taxpayers

David Williams President, Taxpayers Protection Alliance
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Appliance kingpin Whirlpool wants the federal government to step in and give it a competitive advantage over rival washing machine manufacturers. If the Trump administration is serious about ending taxpayer-funded corporate bailouts and draining the swamp, telling Whirlpool to fight its own marketplace battles, as other companies have to do, would be a great place to start.

This is the latest skirmish in an ongoing dispute between Whirlpool and its South Korean competitors. They allege Samsung and LG have illegally evaded trade laws and are “dumping” washing machines on the American market at prices below the cost of production.

Whirlpool wants the Trump administration to impose severe trade barriers on Samsung and LG under Section 201 of the Trade Act of 1974, a move that would help Whirlpool’s bottom line, but in the eyes of many experts, would come at a significant cost for American consumers, taxpayers, and the U.S. economy.

Numbers don’t lie, and revenues show that Whirlpool is still a greatly successful company, despite their claims about losses. Second quarter net sales were up over the same quarter last year. In 2015, Whirlpool attained its highest annual revenue since 2007.  The largest share of the company’s revenue comes from laundry appliances. Just last year, according to a recent Heritage Foundation report, Whirlpool sold 9.7 million washers in the U.S., which is an increase of almost 20 percent from 2013.

Further, if it were true that Whirlpool was struggling as much as they say, the company wouldn’t be giving their CEO a raise.  Not exactly belt-tightening behavior.

The facts in this case, like others before it, just don’t add up.  Notably, the World Trade Organization has cleared Samsung and LG of any wrongdoing in past cases on similar issues. And Section 201 was never really intended to deal with this kind of infraction anyway, it was written to address fairly traded imports, not illegal dumping.

Hitting South Korean manufacturers with heavy sanctions on washing machines would also hurt consumer choice.  As the country (and the world) moves ever closer to the Internet of Things and fully connected smart homes, the features Samsung and LG products offer are going to be in even higher demand than they are now.

Samsung and LG are already working to the benefit of U.S. consumers through intensifying competition in the marketplace and innovation.  And, in fact, their innovation, hard work, and investments have kept prices down and quality up.

Both LG and Samsung are investing heavily in the U.S. as they have announced new, multi-million dollar factory builds in the U.S. this year. These facilities will create jobs for American workers and ease the burden on taxpayers by growing tax revenues.  This is exactly the kind of economy-stimulating investments in U.S. manufacturing that President Trump campaigned on and that we want from companies, regardless of where their home offices are located. Imposing Section 201 sanctions on Samsung and LG could directly result in the loss of around 1,200 good paying American manufacturing jobs.

The impact of the trade sanctions Whirlpool wants would almost certainly be felt in other industries. If the government starts to impose sanctions on imports to the U.S., it is highly likely that U.S. exports would be hit with retaliatory tariffs by foreign governments slowing trade – the lifeblood of our economy. Exports of U.S. products support 41 million American jobs, including about half of all manufacturing jobs. Roughly 300,000 American companies export, 98 percent of them medium-sized and small businesses. It doesn’t make sense to put so many of our own companies at risk to help just one company add to its already significant profit levels.

Government policies that make it easier for American companies to buy and sell in global markets will be much more productive than risky attempts to knock down overseas competitors with unfair sanctions. Whirlpool’s call for protectionism should be ignored.

David Williams is president of the Taxpayers Protection Alliance, an organization dedicated to educating the public through the research, analysis and dissemination of information on the government’s effects on the economy.