All told, the research shows, U.S. consumers are spending an additional $1.5 billion a year on washers and dryers as a result of the tariffs. That’s an extra $86 for each washing machine and $92 for each dryer, the authors estimate.
And less than 10 percent of that goes to the U.S. treasury — about $82.2 million — the study showed.
The authors ran their analysis using weekly price data on appliances from the market research firm Gap Intelligence. If the tariffs cost $82 million but consumers are paying $1.5 billion, where’s the rest of that money going? Foreign manufacturers are passing some costs on to consumers, while domestic ones are simply pocketing extra profits, according to the study.
“In addition to increased profitability of the domestic manufacturers, one other reason for the gap are cost increases for the foreign manufacturers associated with relocating production to the U.S.,” according to researcher Felix Tintelnot of the University of Chicago.
Domestic manufacturers were able to do this simply because they don’t have much U.S.-based competition. “The market for washing machines is concentrated, and the domestic manufacturers certainly have market power,” Tintelnot said.
Manufacturers also capitalized on buyer habits when they bumped up the price of dryers, which were not subject to the tariffs. “Many consumers buy these goods in a bundle,” Tintelnot said. “Part of the price increase for washers was hidden by increasing the price of dryers.”
The tariffs were implemented in January 2018 in response to a complaint from Michigan-based Whirlpool about low-cost competition from companies such as South Korea’s Samsung and LG. At the time, Whirlpool’s chairman, Jeff M. Fettig, framed the tariffs as a win for workers and consumers. “This announcement caps nearly a decade of litigation and will result in new manufacturing jobs in Ohio, Kentucky, South Carolina and Tennessee,” he said. “This is a victory for American workers and consumers alike.”
But the research released this week shows that U.S. consumers shouldered 125 to 225 percent of the costs of the washing-machine tariffs. And the duty was mostly a dud on the job-creation front.
In other words, had the Trump administration simply left washing machines alone and raised taxes on American consumers by $1.5 billion, it could have poured that money into a federally funded initiative creating nearly 50,000 jobs, or about 27 times the number created by the washing-machine tariffs.