U.S. commission recommends tariffs to curb Samsung, LG washer imports

WASHINGTON/SEOUL (Reuters) - The U.S. International Trade Commission on Tuesday recommended tariffs to keep Samsung 005930.KS and LG 066570.KS from flooding the U.S. market with inexpensive washers, a step that would protect American appliance giant Whirlpool Corp WHR.N.

The logo of Samsung Electronics is seen in front of its office building in Seoul, South Korea, August 25, 2017. REUTERS/Kim Hong-Ji

The ITC said a graduated tariff rate should be placed on imports of large residential washing machines above a 1.2 million-unit threshold over the next three years, starting at 50 percent the first year and sliding to 40 percent by the third.

The panel was split on whether tariffs should be imposed if fewer than 1.2 million units were imported in any given year.

Whirlpool shares moved higher on news of the recommendation, ending up 2.2 percent.

U.S. President Donald Trump is expected to make a decision on the recommendation by early next year.

The ITC found last month that surging imports harmed domestic producers, although it did not find that washers made specifically in South Korea, already subject to anti-dumping duties, were responsible.

Samsung Electronics and LG Electronics said any tariff would raise prices, limit consumer choices and hurt job creation.

The South Korean firms plan to open home appliance factories in the United States in the next few years, which could cushion the blow from possible import tariffs.

“Import restrictions would jeopardize LG’s U.S. jobs by hindering the ramp-up of the Tennessee factory,” LG said.

The company is projected to sell about 1.2 million washing machines in the United States this year, an LG spokesman said. He added that combined U.S. sales by LG and Samsung would reach about 2.5 million, well above the recommended quota.

A Samsung spokesman said its U.S. sales number was not immediately available.

Samsung said any tariffs “would harm the workers in our South Carolina factory, or limit them from delivering innovative washing machines, made by Americans for Americans”.

Lawmakers from South Carolina, where Samsung is building a factory, had written to the ITC to ask that any remedies not be too severe.

Samsung Electronics shares ended up 1.2 percent, while LG Electronics rose 3.2 percent during Asian trading hours on Wednesday, in a wider market .KS11 that gained 0.4 percent.

South Korea’s trade ministry, after meeting officials from Samsung and LG later on Wednesday, said the government plans to consider whether or not to complain to the World Trade Organization depending on Trump’s final decision on the tariffs.

A 20 percent tariff, if applied to imports below the 1.2 million quota, will “deal a big blow to South Korean firms’ exports to the United States,” the ministry said in a statement.

Whirlpool brought the case under Section 201 of the U.S. Trade Act of 1974 seeking “global safeguard” restrictions to protect its market. It is one of two major recent cases relying on Section 201, a statute that had not been invoked since 2002, when then-President George W. Bush imposed temporary tariffs on steel imports.

Additional reporting by David Lawder in WASHINGTON, Dahee Kim IN SEOUL; editing by Cynthia Osterman, Jonathan Oatis and Himani Sarkar