The development is likely to trigger more investment from the duo, in the form of opening factories in the state, which is likely to create more jobs and funnel in more investment, as a way to mitigate this order.
On Tuesday, in a step designed to protect products of American appliance giant Whirlpool Corp, the U.S. International Trade Commission recomended imposing further tariffs on Samsung and LG products that have flooded the U.S. market with inexpensive washers.
In a statement, the ITC recomended that a graduated tariff rate should be placed on imports of big residential washing machines above a 1.2 million-unit threshold in the next three years, starting at 50% in the first year and 40% by the third.
The panel was undecided on the imposition of tariffs, on imports, if their number was fewer than 1.2 million units in any given year.
With the news reaching the market, Whirlpool’s shares climbed higher by 2.2%.
U.S. President Donald Trump is expected to make a decision on the recommendation by early 2018.
The ITC found, surging imports have harmed domestic producers, although it did not specifically find washers made by South Korea, which are already subject to anti-dumping duties, were responsible for this surge.
Both, LG Electronics and Samsung Electronics have said, any hike in import tariffs would raise prices, hurt job creation, and limit consumer choices.
Both South Korea companies plan on opening home appliance factories in the U.S., in the next few years, as a means to overcome the impossition of these steep import tariffs.
“Import restrictions would jeopardize LG’s U.S. jobs by hindering the ramp-up of the Tennessee factory,” said LG.
As per a spokesman from LG, 1.2 million washing machines are projected to be sold in the U.S. this year. He went on to add, the combined sales of Samsung and LG in the U.S. would be around 2.5 million, well above the recommended quota.
Samsung’s spokesman said its U.S. sales figures weren’t immediately available.
Samsung said any tariffs “would harm the workers in our South Carolina factory, or limit them from delivering innovative washing machines, made by Americans for Americans”.
South Carolina’s lawmakers, where Samsung is building a factory, had written to the ITC saying any remedies on Samsung need not be too severe.
Incidentally, it was Whirlpool who brought the case under Section 201 of the U.S. Trade Act of 1974 seeking “global safeguard” restrictions to protect its market.