China, South Korea Vow Retaliation In Trump Trade War

When we reported earlier today  that President Trump lobbed the first real shot in the global (but mostly Asian) trade war when the White House announced it would slap imported solar cells and washing machines with up to 50% tariffs - Trump's most significant trade action to date, taking direct aim at China and South Korea (full details here)- we said that "we now await China's (or South Korea's) response..."

We didn't have long to wait.

South Korea stormed out of the gate, with Reuters reporting that it will complain with the WTO against the U.S. for imposing anti-dumping duties on Korean washing machine and solar panel makers, a decision Trade Minister Kim Hyun-chong called “excessive” and "regrettable." Kim warned that the US safeguard decision is "excessive" and violates WTO provisions.

As a reminder, the United States will impose a 20 percent tariff on the first 1.2 million imported large residential washers in the first year, and a 50% tariff on machines above that number. The tariffs decline to 16% and 40% respectively in the third year.

"The United States has opted for measures that put political considerations ahead of international standards,” Kim said in a meeting with industry officials on Tuesday. "The government will actively respond to the spread of protectionist measures to defend national interests," he said.

South Korea will also consider discussing steps jointly with other countries subject to the imposition, the trade ministry said, meanwhile the South Korean government said it would help Samsung and LG in finding alternative markets for the sale of washing machines.

Additionally, Bloomberg reports that South Korea will also seek to retaliate in kind by reinstating tariffs on the U.S. in what has been dubbed the "Washing Machine" row. To do that, South Korea asked the World Trade Organization to approve suspension of trade concessions, the trade ministry says in an emailed statement.

Yet while S. Korea flexes its diplomatic muscle, local producers of washing machines - which may see tariffs as high as 50% - tumbled: Woongjin Energy dropped as much as 9.4%, LG Electronics slid 5.1%; Hanwha Chemical dropped 4.3% before rebounding, OCI dell as much as 3.5%, and Samsung SDI was down 1.7%.

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Before markets even opened, companies reacted: the decision means everyone will pay more, Samsung Electronics said on its website according to Bloomberg.

To minimize losses from the US tariffs, LG Electronics is expected open new American plants early and expanding production at existing plants in the country (in other words, Trump may be winning again).

And while S.Korean consumer electronics companies were hurt by Trump's tariffs, in China it will be the solar  companies that were affected. Here Trump announced a 30% tariff on imported solar cells and modules in the first year, with the tariffs declining to 15% by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.

Beijing was just as quick to respond to Trump's announcement, warning that China is "strongly" dissatisfied with U.S. tariffs on solar imports. The Chinese Ministry of Commerce added that US tariffs on solar products and washing machines are a misuse of trade remedy measures, and warned that U.S. tariffs will hurt healthy development of its industries and worsen global trade environment

The ministry also said that China hopes the U.S. will show restraint in trade restrictions, although it did not specify what remedy China would pursue in response. We anticipate a proportional tit-for-tat, even though US exports to China are far less relevant to the global trade picture and capital flows than vice versa.

Meanwhile, US companies are already winning: Whirlpool said it’s adding 200 jobs moments after the Trump Administration's announcement of the tariff of up to 50 percent on large residential washing machines, aimed at penalizing Samsung and LG Electronics.

The new full-time employees will work at a factory in Clyde, Ohio, Whirlpool said on Monday. The American appliance maker also vowed to make broader investments in manufacturing and innovation.

Whirlpool, based in Benton Harbor, Michigan, renewed allegations last year that its South Korean rivals illegally undercut prices on washing machines. In May, it filed a so-called safeguard petition, which is meant to provide help to domestic manufacturers hurt by importers selling products at excessively low levels.

"This is a victory for American workers and consumers alike," said Whirlpool CEO Jeff Fettig. "By enforcing our existing trade laws, President Trump has ensured American workers will compete on a level playing field with their foreign counterparts, enabled new manufacturing jobs here in America and will usher in a new era of innovation for consumers everywhere."

Fettig served as a member of the president’s manufacturing council, which however disbanded itself last year after a controversy over Trump’s remarks about a white supremacist rally in Charlottesville, Virginia.

As for victorious American consumers, let's first wait and see just how China and South Korea will respond in what is now clearly a tit-for-tat escalating trade war.

Comments

fx shitshitshit Tue, 01/23/2018 - 06:20 Permalink

But, but... the USA is doing sooo much to protect them from the North Koreans - and now these southern bastards want to retaliate against MAGA? And even much worse, they want to march alongside with the North in the opening ceremony of the Olympics! Imagine, they may even come to peaceful terms with each other! That is not what was scheduled. There shall be war down there, fire and fury and what not! After all, all these bombs and missiles have to be used up to make space for the fresh stuff. Make the MIC even greater again!

In reply to by shitshitshit

Klassenfeind fx Tue, 01/23/2018 - 07:32 Permalink

"Make the MIC even greater again!"

Indeed fx, and yet all those naive souls here in ZH still root for this Orange Tweeting Clown in the Oval Office and believe he'll drain the swamp...

*) American involvement in Syria did not stop after Trump was elected. To the contrary, he fired 59 cruise missiles on Syria within weeks of being installed as president.

*) He's been busy raking up the emotions on the Korean Peninsula from the day he was in office

*) and last but not least, war with Iran also seems high on the Trump 'drain-the-swamp-agenda.' 

In reply to by fx

JimmyJones HopefulCynical Tue, 01/23/2018 - 07:38 Permalink

Good Mr. President, we have tried it the Globalists way and watched our quality of life slowly deminish like a frog boiling in a pot. I'm all for this, now remove the EPA regs that prevent us from processing Rare Earth Minerals so that we can get back into the electronic components manufacturing game. Undo the Thorium Regs that Clinton put in place.

#ReleaseTheMemo

In reply to by HopefulCynical

Killdo 07564111 Tue, 01/23/2018 - 08:03 Permalink

"....Whirlpool, based in Benton Harbor, Michigan, renewed allegations last year that its South Korean rivals illegally undercut prices on washing machines...."

what kind of price 'cuts' are talking about ? IN other countries (i.e. UK - you can buy a much better washing machine than anything in the US of AIPAC - for half of the price or less. I had this kind of a machine for 13 years or so - it washed far better than the inefficient and huge US machines, it spins the shit out of the clothes so they come almost dry and is gentler on clothes because they don't rub off that thing american machines have in the center of the drum:

 

http://www.argos.co.uk/product/6532541

In reply to by 07564111

Vendetta 1 Alabama Tue, 01/23/2018 - 09:26 Permalink

Don’t get caught in the propaganda trap that things CAN’T be made to last  anymore .., they CAN be and ARE as in the case of an aircraft or outboard boat motors... but the producers don’t WANT them to last. Recurring revenues are the game ... that’s why a washing machine failing after 5 or 6 years works ‘perfectly’ for the producers rather than lasting 15 or 20 years 

In reply to by 1 Alabama

MK ULTRA Alpha 07564111 Tue, 01/23/2018 - 07:04 Permalink

The US is experiencing the greatest wealth creation in world history and you foam like a mad dog.

US GDP growth and equity market growth, total US wealth creation is equal to 7 Russian GDP, that's right, US economic wealth creation is 7 times Russian GDP.

The US equity markets are generating wealth at a rate Russia can't compete, and they can play with all the stockpiles of gold, the small amount of gold, the Russians keep using for propaganda purposes. Russian Gold Reserves are a joke.

If GDP is used as the measure of wealth, then Russia's $1.3 trillion GDP compared to US GDP of around $20 trillion means, US GDP is roughly 20 times Russian GDP.

US Wealth Creation using all US metrics, is growing much faster than 3% or 4% GDP growth.

Think about it, the US creates one Russia each year by just GDP growth, or the US out ranks Russia in wealth creation, I estimate combining GDP growth, US outranks Russia by 7 times Russian GDP. Whatever the most accurate measure, the US outranks Russia on a scale which Russia can't compete.

Where are you posting from? many say you're Russian, it's most likely, it's one of the US based kids brainwashed with communism by the Obama era indoctrination and media mind control to hate and destroy America, and many of these mindless communist  kids pump Russia as world savior when it's a dirt poor back water.

Russia is a Blowfish using propaganda to make itself bigger than what it is. Now smoke a bowl of that before Sessions comes. And get a job and quit feeding off of MOMMA.

 

In reply to by 07564111

MK ULTRA Alpha Shemp 4 Victory Tue, 01/23/2018 - 07:39 Permalink

How long have you been living in this fantasy world? I've read you before, it's always a delusional comment based on your anti-American bias. In order to prove your hate for America, you're willing to twist reality, live in a delusion for your belief system.

Even if the data were objectively presented, much better than I can do, you will ask the same question, hoping to con someone else into your cause. It is you, the extreme left communist running the fake reality because that is all you have left.

Grow Up. And what country are you posting from?

In reply to by Shemp 4 Victory

MK ULTRA Alpha css1971 Tue, 01/23/2018 - 09:32 Permalink

Total National Assets are around $136 trillion, total national public and private debt is around $67 trillion. Subtracts assets from debt, $136 trillion minus $67 trillion is around $70 trillion in wealth. However, this is rear view mirror data, real wealth creation is out pacing debt creation. ,

The anti-American bias skews not just your data but your mind.

 

In reply to by css1971