Are U.S. Trade Cases Futile?
As widely expected the U.S. International Trade Commission has determined that Chinese exports of large residential washing machines has materially damaged U.S. industry. The case was brought by Whirlpool against manufacturers including Samsung Electronics and LG.
As is often the case, exports from China to the U.S. have already fallen.
But Samsung switched its source of supply from China to Vietnam and Thailand even in advance of the ruling leading to an overall increase in washing machine imports to the U.S.
Data from Panjiva, a provider of global trade intelligence, shows shipments from China to the U.S. fell 29.3 percent in the three months ending November 30, 2016, compared to the same period a year earlier. Yet, overall imports increased 7.7 percent over the same period due to increased shipments from Vietnam and Thailand.
“This can be seen as part of a general trend of countries other than China becoming the problem for U.S. manufacturers,” noted a Panjiva research report. “It also highlights that the intended effects of trade cases—namely to protect U.S. industry—can be defeated by rapid reactions by targeted suppliers.”
Samsung has proven to be particularly agile in adapting its supply chain to the case since it was initiated in January 2016. It cut its imports of all washing machines from China by 84.3 percent in the 12 months ending October 2016. At the same time though it ramped up imports from Vietnam and Thailand, with the result that its total exports to the U.S. climbed 20.2 percent in the fourth quarter, and 12.7 percent for the full year.
LG, by contrast, has struggled to adapt as quickly. While it cut its Chinese exports by 88.8 percent in the fourth quarter, it has only partially replaced this with shipments from Thailand. As a consequence its overall shipments to the U.S. fell 41.0 percent in the fourth quarter.