America First Policy Hits Tennessee's Hopes of LG Manufacturing Plant

Trumps America First policy threatens a new LG Electronics washing machine factory in Tennessee. The details are ironic.

Déjà Vu Tariff Madness

When President Donald Trump imposed steep tariffs on imported washing machines last week it was a “Not Again” moment for officials in this north Tennessee city that has lost jobs to an international trade dispute before.

The move threatens to stunt the launch of a new LG Electronics (066570.KS) washing machine factory under construction in Clarksville, just four years after the U.S.-China trade fight over solar panels scuttled a nearby $1.2 billion Hemlock Semiconductor polysilicon plant.

“It’s like déjà vu for Clarksville, to say ‘how can this be happening twice to us,'” the city’s mayor, Kim McMillan, told Reuters.

At stake is an appliance manufacturing complex that could eventually employ thousands of workers and which the state of Tennessee and the local community supported with some $23 million in grants. The 310-acre (1.25 square kilometer) site an hour north of Nashville has room for three additional buildings identical to the plant’s $250 million, 600-job first phase.

Trump’s decision to impose 20 percent to 50 percent tariffs on washer imports and parts has local officials asking what his “America First” stands for: supporting all U.S. manufacturing jobs or just favoring traditional American brands over foreign rivals. Labor statistics show that foreign companies have been the source of the majority of new manufacturing jobs since the 2009 recession.

America First Irony: American Jobs or American Brands

Trump's tariffs favor Whirlpool and GE Appliances, now owned by China’s Haier Electronics Group, over a competitor moving production and jobs to Tennessee.

“I think it goes against what (Trump) has talked about doing and that’s bringing jobs back to America,” said Durrett, the county mayor and a Republican.

America First Madness

A week ago I noted Solar Companies Behind Tariff Increases are Foreign-Owned. Today we learn the same about washing machines.

Professor Steve Hanke says "Trump is Clueless About Trade" and the math provides all the evidence one needs.

Reader Comments Addendum

Reader comments hit the nail on the head.

  • The Realist: "How ironic. Trump offers simple solutions to complex problems. The net result is worse than if he did nothing at all."
  • Curious Cat: "For every complex question there is a simple solution.... that's wrong"
  • Via Email: "Trump's trade policy is for Neanderthals. It feels good to club the other guy over the side of the head except when he gets up and puts a spear in your side. It’s why Neanderthals are extinct."
  • Sechel: "Protectionism can only lead to higher prices and poor quality. When we limit competition what other result can there be?"

Mike "Mish" Shedlock

Hope the LG products from TN are better made as LG quality is terrible.

protectionism can only lead to higher prices and poor quality. when we limit competition what other result can there be?

protectionism can only lead to higher prices and poor quality. when we limit competition what other result can there be? - Beautiful - Adding to the addendum

I don't know about other appliances. But, have you used an LG washing machine? They are the best.

Play stupid games, win stupid prizes.

I acknowledge that the article tells us LG is now increasing its prices in consequence of the Trump tariffs on imported products but does that not suggest getting the TN plant operational to then sell products that are not hit with tariffs becomes even more essential to LG not that TN is about to suffer another closedown? The only point the article makes and it is an oblique one in support of the assertion TN is going to suffer is the suggestion from the LG spokesman that “If you lose floor space at retail, it can take years to get it back"'~ so perhaps sales initially will be lower than expected when the factory was commissioned, but perhaps not.

All politicians care about is how they appear to be doing their job. LG can make a deal whereby they agree to make appliances in the US in exchange for getting tariffs dropped. Trump can crow about his success and LG can do what they would have done otherwise. Sure, some publications will point out that nothing changed, but Trump will deny it and claim they're out to get me, which is true, and most won't read the articles.

Trying to control the decisions people make - which is what an economy really is - is like playing a game of whack-a-mole. Knock down one "problem" and two or three others emerge. Only this game has real-life consequence for real people.

The "opioid crisis" is a perfect example. Make it harder to get painkillers from the white market and those who need them will turn to the black market. And the black market is more than happy to provide - at a greatly elevated cost. And because they can't really be held accountable for "issues," they are more than willing to eliminate pesky things like quality control or customer service to increase their own profit.

Who is hurt? The manufacturer of the now-banned substance? Nah, they have plenty of other drugs they can increase the price of slightly to cover the losses. The politicians? Nope - they get to say they are "tough on crime" and that they are "doing something" about the crisis. And the black marketeer definitely isn't hurt - in fact, the new law opened up a new market for them meaning increased profits.

The only ones actually hurt are those who need the painkillers in the first place - those with amputations, and burns, and terminal cancers. Those who need it may not get it because a doctor may be reluctant to prescribe them for fear of having to answer to the DEA or perhaps getting sued or charged criminally if something happens.

You can't control everything and everyone. You can't predict the decisions people will make with any degree of accuracy. And you can't fix everything bad in the world with laws.

What you can - and will - do is make things worse.

For every complex problem there really IS a simple solution, but the simple solution is generally far removed from the location of the perceived problem.

Can lead to poor quality? Most things made now are junk. How much worse can it really get? Even New Balance sneakers have become garbage.