In January 2018, the White House announced that it would take safeguard action after the USITC determined that a surge of washing-machine imports was harming the domestic industry. President Trump announced a 20% tariff on the first 1.2 million imported washers and a 50% import tax rate for additional washers imported in 2018. At the time, a South Korean report said that LG "was planning to raise prices of its washing machines in the United States by about 4-8 percent in March." Goldman Sachs forecast "an 8 percent to 20 percent increase in the price of a new washing machine in the next year." In particular, The Trump administration announced Monday it will impose a 20 percent tariff on the first 1.2 million imported large residential washing machines in the first year and a 50 percent tariff on machines above that number. For his part, Samuel Eisner expects the same level of imports in 2018 as in years past, around 3.4 million washing machines. His assumption implies an effective tariff rate of roughly 40 percent, and if international suppliers pass along half the cost of the tariff, Americans could wind up shelling out a premium. Economist Dani Rodrik tweeted that "if retail prices of washers-dryers increase only by around $50, this will be a big 'net gain' for the US economy." Let's figure out why Rodrik said this. Start from our partial-equilibrium diagram for a small economy that is a price taker. The key ingredients in this model are: domestic demand slopes downward, domestic supply slopes upward, and the world price is below the autarky price.

Price + Price + S Pw(1+ t) Pw D S2 D2 Quantity M2 M1 Imports Imports = M2