The U.S. set tariffs as high as 82 percent on large, residential washers from South Korea and 72 percent on the products from Mexico, concluding the items are sold below production costs to drive out American competitors.
The Commerce Department in a preliminary finding today responded to Whirlpool Corp. (WHR:US)’s complaint that LG Electronics Inc. (066570) and Daewoo Electronics Corp., both based in Seoul, and Samsung Electronics Co. (005930) of Suwon, South Korea, use unfair trade practices. Laundry appliances accounted for 30 percent of Whirlpool’s 2011 revenue of $18.7 billion, according to its annual report.
Daewoo should pay 82 percent, LG 12 percent, Samsung 9.6 percent and all other companies 11 percent for products made in Korea, the Commerce Department said. For machines made in Mexico, the agency announced duties of 72 percent for Samsung and a Whirlpool affiliate and 33 percent for other companies. A final decision will be issued in December, the agency said.
LG and Samsung, in separate statements, contested the Commerce Department decisions. In addition, Samsung said it no longer makes washers in Mexico, and Whirlpool said it no longer ships units to the U.S. from Mexico.
Whirlpool has 3,500 employees in Clyde, Ohio, between Toledo and Cleveland, where washing machines are manufactured. The company has invested $175 million to make energy- and water- efficient appliances, according to a statement when the complaint was filed on Dec. 30.
“Our investments will continue as long as we can compete on a level playing field, with all of our foreign competitors playing by the established rules,” Kristine Vernier, a spokeswoman for the Benton Harbor, Michigan-based company, said today in a statement.
Whirlpool fell 49 cents to $68.12 at 3:42 p.m. in New York Stock Exchange composite trading. The shares had climbed as much as 1.7 percent after the U.S. announcement.
LG said in a statement that the Commerce Department’s calculations were “significantly overstated” and said it is confident a review by the U.S. International Trade Commission, an independent agency, will find U.S. companies weren’t harmed.
Samsung “strongly disagrees” with the finding and said the company will be found in compliance “once the final phase of the investigation is completed,” according to a statement.
The U.S. also announced duties of 72 percent for a Whirlpool subsidiary in Mexico, Whirlpool International. The high tariffs for Daewoo, Samsung and Whirlpool International reflected failure to cooperate, the Commerce Department said in a statement.
In May, the U.S. ordered initial tariffs after finding LG, Daewoo and Samsung got subsidies from South Korea’s government that undercut U.S. producers. Daewoo was told to pay 71 percent, with smaller duties of 1.2 percent for Samsung and 0.22 percent for LG Electronics on their share of $569 million in annual imports from South Korea. All other companies would pay 1.2 percent. The duty for Daewoo reflected refusal to respond, the agency said.
The duties may help reduce unbalanced trade with both nations. U.S. has deficits of $13 billion with Korea and $64 billion with Mexico, according to the U.S. Census Bureau.
The Commerce Department and the U.S. International Trade Commission are scheduled to make their final determinations on the Whirlpool complaint later this year.
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