Washing machines bring bad luck to the two Korean chaebols LG Electronics and Samsung Electronics who got caught by the Trump – as we anticipated in October 2016 – a 30-50% increase in customs tariffs for the dumping practiced against American producers. But the bad luck of the laundry has other precedents. Already in 2014, at the IFA European fair in Berlin, a furious quarrel had broken out between the two big names with heavy aftermath for alleged industrial espionage. Samsung officials had accused LG's home appliance chief, Joo Seng-Jin, of stealthily damaging their washing machines to spy on their secrets. Joo had, alas, been videotaped by security cameras kicking or otherwise attempting to look inside Samsung machines. After which the enmity had continued in the form of a secret and implacable war, but with an undeniable merit: that of having competed in record-breaking innovations. And ever lower prices because in this way they were able to ensure that competitors with American factories and American costs suffered heavy reductions in sales.
The washing machines in turbulence
The evil influence of washing machines resumed its course in the meantime because in 2016, when Samsung, already hit by another bad luck, that of the explosive batteries of the Galaxy Note 7 smartphones, had to withdraw its washing machines because in full spin they showed rash and turbulent movements up to the dangerous burning of the tank. After that, with washing machines perhaps the two big names should have been more relaxed but no, they continued what they had begun to do in 2010: very low prices and markets in turmoil, and always with undeniably innovative and super appliances. Which took away market shares from the Americans (in 2017 Whirlpool's share dropped from 19,7 to 17,3%). It was and it is undoubtedly "Chinese" prices to the detriment of American competitors as well as workers in Chinese factories, poorly paid to say the least.
Yes, it's dumping, says Trump
In 2011 Whirlpool had planted a problem with precise accusations of unfair competition –again for washing machines- before the USTC, the American Trade Commission, which then only recognized in 2016 that yes, it was indeed dumping as Whirlpool had written, providing technical arguments to Trump for tariffs. But what made the USTC decide more than Trump to anticipate the heavy tariffs was the length hide-and-seek game that Korean companies had been playing since 2011, transferring the factories from China, then to Vietnam and then to Thailand to "demonstrate" that dumping no longer existed, because the factory no longer existed. Thus, in a frenzied moving activity, they opened and closed factories…But the two Korean chaebol had understood since 2011 that hard times were ahead and that, to curry favor with the American authorities, they had to open some small factories in the States as well: LG in Tennessee and Samsung in South Carolina. Always about washing machines.
Screwdriver factories
This is actually the classic case of screwdriver factories, i.e. areas of assembly of tools from Asia. The words of the spokesmen of the big Koreans are revealing: "Trump's decision will cause serious delays in the deliveries of detached parts", they declared. Detached pieces that can be assembled in a short time with a screwdriver and screws. And LG displaces everyone by anticipating the start of production of the factory expected in 2019 by a few months and above all by increasing prices by about 50 dollars for each washing machine and tumble dryer - as the well-informed Wall Street Journal revealed at the beginning of January. No problem with price increases, LG immediately assured in a confidential meeting with American retail, proving that Trump's tariffs will not give overwhelming advantages to competitors.
Other than washing machines and solar panels, the Boeings are at risk
As we know, precise anticipations came from Trump's advisers: now it's the turn of intellectual property, steel and aluminum, affected by Chinese, Korean and global competition. At the moment. And with an illustrious victim, the BMW which has allowed itself to manufacture its cars – in great dust on the American market – in nearby Mexico. And then a long series of other products of which - note American experts - it will be difficult to bring production back to the homeland because skills, factories and know-how have disappeared for decades. In return, China governs two formidable weapons that will cause enormous damage if Trump's iconoclastic fury continues, as it is certain: the Boeing and soy (all transgenic) of which China is the first consumer-importer in the world. That is: in place of Boeing planes it is known that it is ready to replace itself in Airbus supplies. While the enormous quantity of transgenic soybeans - which many countries rightly reject - that China imports is used to feed the countless pig farms (50% of the world total) of which the Chinese are avid consumers. An economic disaster would befall American farmers if their transgenic, pumped soybeans were no longer bought by the Chinese. Not to mention the disasters that tariffs on solar panels are already causing not in China but in America, where local producers will have to pay dearly for the components. So? “The Trump administration has deliberately decided to apply duties to products manufactured all over the world”. The New York Times was the first to write it, picked up by TV and the press throughout the country.
From the blog Paula's house.
