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"Protectionist Trade Policies Can Backfire" on Those They Are Intended to Protect



(p. B1) You may not have appreciated it at the time -- golden eras have a habit of coming and going like that -- but a five-year stretch that started in 2013 was a pretty great time to buy a washing machine.

Inflation for home laundry equipment, as measured by the Labor Department, fell steadily during that time, which meant you could buy the same washer your neighbor bought last year for less money. Or you could buy a better one at the same price. Great news for your clothes, though maybe bad news for your friendship, if your neighbor was the covetous type.

That stretch of laundry deflation ended last year, shortly after President Trump imposed tariffs, starting at 20 percent, on imported washers. The move was a response to a complaint filed by Whirlpool, a Michigan-based manufacturer.


. . .


A year after Mr. Trump announced the tariffs, washing machine prices were up, as many analysts had expected. But that has not been a boon to the makers of washers because fewer Ameri-(p. B4)cans are investing in new laundry equipment, exposing how protectionist trade policies can backfire on the very companies they are meant to safeguard.

Tariffs of two varieties have pushed prices up

The washer-specific tariffs raised costs for importers like LG and Samsung. But another tariff issued by Mr. Trump, on imported steel, raised costs for some domestic manufacturers like Whirlpool, which took those companies by surprise.

Many manufacturers passed those higher costs on to consumers. Once stores worked their way through models that had been imported before tariffs hit, deflation gave way to sharp price increases.

After years of steady growth, sales reversed in 2018

A basic rule of economics is that when the price of something goes up, people buy less of it. That's just what happened to washing machines.



For the full story, see:

Jim Tankersley. "Tariffs Tossed a Market Right Into a Spin Cycle." The New York Times (Saturday, Jan. 26, 2019): B1 & B4.

(Note: ellipsis added; bold and larger font in original.)

(Note: the online version of the story has the date Jan. 25, 2019, and has the title "'How Tariffs Stained the Washing Machine Market.")






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