Update on washing machine tariffs

Six months ago I posted on the likely effects of tariffs on washing machines.  As any NC State MBA student would know, a tariff on washing machines would lead to (1) higher prices, (2) fewer purchases (demand curves slope downwards), (3) more domestic production, (4) fewer imports, and (5) increased government revenue.

WP columnist Catherine Rampell provides an update in a recent column.  The not-so-surprising news is that after a 20% tariff, washing machine prices increased 17% in May.  There is more domestic production, but some of it will be coming from new factories that Samsung and LG plan to open in the US.

The news on the job front is less clear.  Other things equal, Whirlpool would expand production in response to higher prices.  But the washing machine tariff is not an isolated event.  Tariffs on steel have increased production costs of washing machines, dampening the increase in domestic production (and jobs).  Also, European countries are preparing their own tariffs in reaction to the aluminum and steel tariffs and U.S. washing machines are on their hit-list.

Rampell cites estimates that US consumers will pay hundreds of thousands of dollars in higher prices for each domestic washing machine job saved by the tariff.  Most of this money will not filter its way to the employees, who are going through their own spin cycle.