George F. Will: Whirlpool has Washington in a spin cycle
A household appliance will be the next steppingstone on America's path to restored greatness. The government is poised to punish many Americans, in the name of protecting a few of them, because, in the government's opinion, too many of them are choosing to buy foreign-made washing machines for no better reason than that the buyers think they are better.
If you are wondering why the government is squandering its dwindling prestige by having opinions about such things, you have not been paying attention to Whirlpool's demonstration that it is more adept at manipulating Washington than it is at making washing machines.
In 2006, when Whirlpool was paying $1.7 billion to buy its largest competitor, Maytag, federal regulators fretted that this would give the company too much market power. Whirlpool said: Fear not, competition from foreign manufacturers such as South Korea's Samsung and LG will keep us sharp and benefit American consumers. Now, however, Whirlpool, which is weary of competition, has persuaded the U.S. International Trade Commission to rule that Samsung and LG should be reproached for what, 11 years ago, Whirlpool said it welcomed: competition.
The U.S. market for washing machines has grown 35 percent in just five years. Whirlpool's share of this market, although not the 70 percent it was in 2006, is still more than Samsung's and LG's combined 35 percent. In this happy circumstance, Whirlpool is profitable. It would, however, like to be more so, and it will be if the president accedes to the commission's unanimous recommendation and imposes a “tariff-rate quota.”
This is a tax, paid by American consumers, on imports that exceed a certain quantity that, in the government's opinion (formed with the assistance of domestic manufacturers), is excessive.
The tariff/tax, which is designed to limit the choices of, and increase the prices paid by, American consumers would be 50 percent on all imported machines, after the first 1.2 million. U.S. customers caused the importation of about 3 million Samsung and LG washers in 2016.
Samsung and LG have announced plans to become domestic manufacturers. Samsung will open a manufacturing plant, with approximately 1,000 employees, in Newberry, S.C. LG's plant will be near Clarksville, Tenn.
Before Whirlpool became dependent on government, it depended on Sears, which in the 1920s threw a financial lifeline to a struggling appliance manufacturer, Upton Machine Co., that became Whirlpool. According to The Wall Street Journal, as recently as 2002, when Sears sold 40 percent of the major appliances bought in America, sales through Sears generated about a fifth of Whirlpool's revenues.
Sears is not what it was just 15 years ago, and is a shadow of what it was in the 1960s when its sales were almost 1 percent of U.S. GDP. Sears has been prostrated not by perfidious foreigners but by America's efficient “big box” retailers and by Amazon. The real villains, however, are American consumers, with their persnickety search for high quality and low prices.
The president has until February to exercise his vast discretion regarding things like washing machine imports. If you are wondering how presidents came to have such discretion to impose taxation on American consumers, you have not been paying attention to Congress' creation, by improperly delegated powers, of the imperial presidency.
George F. Will is a columnist for Newsweek and The Washington Post.