US trade officials back tariffs

US trade officials back tariffs

Shares of South Korean appliance makers Samsung and LG have risen as investors shrugged off a recommendation by US trade officials that US president Donald Trump impose tariffs on foreign-made washing machines they say are undercutting domestic manufacturers.

Commissioners from the US International Trade Commission, at a hearing in Washington on Tuesday, offered a range of choices within a three-year quota system for Trump, who is expected to issue a final ruling by early next year. South Korea’s trade ministry said it may consider filing a complaint with the World Trade Organisation after a decision is reached.

The case is a test of Trump’s vow to crack down on countries that don’t follow international trade rules.

US appliances company Whirlpool has accused Samsung and LG of selling washing machines in the US at below fair-market value while shifting production around to avoid US anti-dumping duties.

LG said that it is reviewing the commission move, calling Whirlpool’s complaint an effort to restrain competition.

Samsung also issued a statement saying “any tariff would raise prices, provide fewer product choices and impair job creation at our South Carolina factory”.

Samsung shares rose 1.2%, while LG jumped 3.2%. While Samsung’s washing machine business could be hit by tariffs, the overall impact on the conglomerate would be negligible, according to Morningstar analyst Dan Baker in Hong Kong.

“It makes a tiny proportion of its profits from washing machines It makes the vast majority of its money from memory semiconductors, smartphones and display panels,” he said.

Whirlpool said it is encouraged by the commission’s recommendations and is confident the Trump administration will take action “to prevent continued abuse of existing trade laws by companies that seek an unfair advantage over American workers.”

Bloomberg


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