The U.S. International Trade Commission ruled that increased imports of large residential washing machines harm U.S. producers, potentially setting the stage for the Trump administration to impose penalties on two major South Korean electronics companies.
On Oct. 5, the ITC voted 4-0 that imports of large residential washers from Samsung Electronics Co. Ltd. and LG Electronics Inc. pose a "cause of serious injury" to the domestic industry, meaning the commission will now look into imposing duties on the foreign corporations' washers.
In May, Michigan-based Whirlpool Corp. filed a Section 201 petition, also known as a safeguard petition, with the ITC seeking an investigation into South Korea-based Samsung and LG, which it argued were "country hopping" to evade U.S. trade laws, and that this allowed them to sell washers at lower prices in the U.S.
Whirlpool argued that Samsung and LG had been "cheating" after the U.S. government applied anti-dumping remedies on the Korean companies, covering washers made in South Korea, Mexico and China. The company charged that Samsung and LG moved production to Thailand and Vietnam to evade the U.S. anti-dumping duties.
The petition also applied to parts of washing machines, including washer cabinets, assembled washer tubs and assembled washer baskets. Whirlpool said any action should cover the individual parts to prevent Samsung and LG from circumventing any potential tariffs on whole-machine imports.
Whirlpool chairman Jeff Fettig said in an Oct. 5 statement that the investigation could lead to an increase in American production jobs.
"The ITC vote is an important win for American manufacturers and American workers," Fettig said. "This vote sets the stage for the administration to put in place an effective remedy to create a level playing field for American workers and manufacturers. This type of corrective action will create U.S. manufacturing jobs."
The ITC will hold a public hearing on the matter Oct. 19 and is scheduled to submit its report containing findings and recommendations, including tariffs, quotas or other restrictions, to President Donald Trump by Dec. 4.
Trump will then decide whether to impose any duties or quotas on the foreign producers.
The U.S. found in 2013 that Samsung and LG were engaging in unlawful dumping of South Korean and Mexican washers in the U.S., eventually moving production to China. Whirlpool filed a petition with the ITC in 2015 against Samsung and LG, which it said led the companies to then move production to Vietnam and Thailand.
In January 2017, the U.S. issued an anti-dumping order against the two companies.
The ITC vote comes after both the Korean producers announced plans to expand production in the U.S. On June 28, Samsung reached an agreement with the state of South Carolina to open a $380 million home appliance manufacturing plant in Newberry County. The plant will produce washing machines beginning in early 2018, Samsung officials said in June.
On Feb. 28, LG announced plans for an 829,000-square-foot home appliance plant near Clarksville, Tenn. That production facility, which is slated to open in 2019, will initially produce front- and top-load washing machines, LG officials said in the announcement.
Samsung said in an Oct. 5 statement that it was "disappointed" with the ITC's decision, adding that it could potentially raise the cost of residential washers for U.S. consumers.
"Restrictions on imports of Samsung washing machines will negatively affect American consumers by limiting choices, raising prices, and offering less innovative washing machines," the company said. "We believe that safeguard remedies should not discriminate in favor of one group of U.S.-based workers over another and should not negatively impact a fair appliance marketplace for consumers."
LG did not immediately respond to a request for comment.
The decision comes as the U.S. and South Korea agreed to begin the process to renegotiate their existing trade deal after wrapping up trade talks Oct. 4 in Washington.