Categories: world

Trumps washing machine Tariffs Stung consumers while lifting corporate profits

Consumers, Mr. Tintelnot noted in an interview, often deal with a new washer and dryer at the same time. Their costs are similar. Rather than raising the prices by 20 percent on tiles and throwing away that balance – no one likes an unbalanced washing machine – the companies instead increased both the washer and dryer, by 11.5 percent each. "Given that many consumers buy these goods in a bundle, the price increases were raised in part by raising the price of dryers," Tintelnot says. "It's very clearly visible." It is not surprising that the tariffs raised the price of foreign tiles. Perhaps more unexpectedly, they also urged US manufacturers to raise their prices. Companies that largely sell imported trays, such as Samsung and LG, raised prices to compensate for the customs costs they had to pay. But domestic manufacturers, such as Whirlpool, increased prices, for largely because they could. There are not many startups of domestic laundry equipment manufacturers that could suppress Whirlpool on price if the company decided to capture more profit by raising prices while competing for it. The researchers do not believe that Mr Trump's other charges, on metals used in washing machine production, contributed to the higher price of American products. "It is unlikely that the household producers' price is increasing which we document here is due to higher input costs – due to charges on other inputs such as steel – because we use other devices with similar steel content as a comparison group,"…

Consumers, Mr. Tintelnot noted in an interview, often deal with a new washer and dryer at the same time. Their costs are similar. Rather than raising the prices by 20 percent on tiles and throwing away that balance – no one likes an unbalanced washing machine – the companies instead increased both the washer and dryer, by 11.5 percent each.

“Given that many consumers buy these goods in a bundle, the price increases were raised in part by raising the price of dryers,” Tintelnot says. “It’s very clearly visible.”

It is not surprising that the tariffs raised the price of foreign tiles. Perhaps more unexpectedly, they also urged US manufacturers to raise their prices.

Companies that largely sell imported trays, such as Samsung and LG, raised prices to compensate for the customs costs they had to pay. But domestic manufacturers, such as Whirlpool, increased prices, for largely because they could. There are not many startups of domestic laundry equipment manufacturers that could suppress Whirlpool on price if the company decided to capture more profit by raising prices while competing for it.

The researchers do not believe that Mr Trump’s other charges, on metals used in washing machine production, contributed to the higher price of American products.

“It is unlikely that the household producers’ price is increasing which we document here is due to higher input costs – due to charges on other inputs such as steel – because we use other devices with similar steel content as a comparison group,” Tintelnot. “Instead, price increases are likely to depend on domestic companies utilizing their market power.”

Of course, consumer costs are only half the equation in trade policy. There is also the issue of job creation: How much politics seems to have shifted production and employment of the current goods from abroad to the United States. The authors are also exploring that issue, and they show evidence of the striking degree that former US efforts to protect domestic producers from foreign competition ended up washing machine production almost overnight in order to avoid US import duties .


Source link

Share
Published by
Faela