1-How Tariffs Stained the Washing Machine Market

President Trump imposed tariffs, starting at 20 percent, on imported washers. The move was a response to a complaint filed by Whirlpool, a Michigan-based manufacturer.

The company has long dominated the washing machine business many Americans have had Whirlpools in their laundry rooms for decades but has recently faced stiffer competition from foreign manufacturers. Whirlpool claimed that foreign competitors like LG and Samsung were flooding the appliance market with washing machines from South Korea and Mexico at prices so low that they were hurting American makers. As an effort to help domestic producers, the tariffs worked very briefly. Whirlpool added 200 jobs at its factory in Clyde, Ohio. Its stock price jumped $20 per share in the first few days after the tariffs took effect.Then things went bad. A year after Mr. Trump announced the tariffs, washing machine prices were up, as many analysts had expected. But that has not been a boon to the makers of washers because fewer Americans are investing in new laundry equipment, exposing how protectionist trade policies can backfire on the very companies they are meant to safeguard.

Tankersley, Jim, New York Times, https://www.nytimes.com. Accessed Jan. 26, 2019.

If the government also places a tariff on steel (which Whirlpool uses to make washing machines),

-the quantity of washing machines Whirlpool sells will decrease even more.

-the production of washing machines will exhibit economies of scale.

-the marginal product of labor will increase for Whirlpool workers.

-the selling price of washing machines will have to decrease to prevent more foreign entry.

2-How Tariffs Stained the Washing Machine Market

President Trump imposed tariffs, starting at 20 percent, on imported washers. The move was a response to a complaint filed by Whirlpool, a Michigan-based manufacturer.

The company has long dominated the washing machine business many Americans have had Whirlpools in their laundry rooms for decades but has recently faced stiffer competition from foreign manufacturers. Whirlpool claimed that foreign competitors like LG and Samsung were flooding the appliance market with washing machines from South Korea and Mexico at prices so low that they were hurting American makers.

As an effort to help domestic producers, the tariffs worked very briefly. Whirlpool added 200 jobs at its factory in Clyde, Ohio. Its stock price jumped $20 per share in the first few days after the tariffs took effect.

Then things went bad.

A year after Mr. Trump announced the tariffs, washing machine prices were up, as many analysts had expected. But that has not been a boon to the makers of washers because fewer Americans are investing in new laundry equipment, exposing how protectionist trade policies can backfire on the very companies they are meant to safeguard.

Tankersley, Jim, New York Times, https://www.nytimes.com. Accessed Jan. 26, 2019.

Because Whirlpool's total revenue has decreased with the tariff on imported washing machines, we can conclude that washing machines

-are inefficient

-have a low demand

-have an inelastic demand

-are subject to a price floor