With healthcare reform in abeyance, tax reform done, and the White House starting to pivot toward immigration, is there still room for the trade agenda? A lot of people are wondering, given the importance placed on it during the campaign in the effort to win key states like Michigan and Pennsylvania.
Donald Trump got elected promising to end bad trade deals that hurt American workers. So far, he's kept his promise, more or less, by pulling out of the Trans-Pacific Partnership and opening NAFTA up to renegotiation. What he hasn't done - and what many, allies and enemies alike expected him to do - was place trade policy at the front and center of a kind of new American nationalism reflecting the populist tenor of his rhetoric.
What he's done so far didn't cause the roof to cave in. The economy is growing even before the tax cuts kick in. What he hasn't done is to change behaviors, especially among corporate rent seekers looking to the U.S. government to protect them from competition using trade policy as the fig leaf by which to do it.
Whirlpool, which makes washing machines and other household appliances, is one of those companies seeking protection, asking the U.S. International Trade Commission to protect its share of the U.S. market under the authority granted it in Section 201 of the Trade Act of 1974.
The company claims an increase in the imports of a certain kind of washing machine has seriously damaged its domestic manufacturing. Thus far the ITC has gone along, recommending in early December the president impose a 50 percent tariff on large residential washers manufactured under the Samsung and LG brand names and that he set a quota on some parts critical to assembling machines in U.S. factories.
The facts tell a different story, one that suggests Whirlpool, which has 35 percent of the domestic residential market in washers (roughly the same as Samsung and LG combined) doesn't need protection so much as it wants to see a trade tariff imposed on its foreign competitors, which will raise the price consumers have to pay, making it a kind of tax hike that's not good for anyone.
If Whirlpool prevails prices will rise, the number of choices available will decline, and the tariff its asking be imposed would put nearly 2,000 new, good-paying U.S. manufacturing jobs at risk. Samsung is right now preparing to open a new integrated manufacturing facility that will also conduct research and development operations in Newberry County, South Carolina. LG is opening a new facility in Clarksville, Tennessee.
Both plants are in what might be called the heart of Trump country and both companies have warned they might not go ahead with their expansions as planned if the tariff proposed by the ITC is adopted. The new jobs everyone thinks are coming might just never materialize. Whirlpool's bid for trade protection is really an effort to box out direct foreign investment and kill thousands of U.S. jobs. This is in direct conflict with President Trump's pledge to protect the interests of workers in the manufacturing sector.
And what of Whirlpool if the president adopts what the ITC has recommended? In testimony before the commission a company representative said the windfall that would result from the new levies would be used on "manufacturing and logistics enhancements" – meaning it's going to buy machines to automate its production processes.
Swapping robots for American workers isn't what Donald Trump meant when he talked about getting out of bad trade deals and "making America great again." What he was elected to do is diametrically opposed to what Whirlpool plans. To get to four percent annual growth or better Washington needs to pursue policies that enhance growth not kill jobs. The president should say "No" to what Whirlpool has persuaded the ITC to recommend and say "Yes" to jobs in South Carolina and Tennessee.