Trump’s US presidential term has entered its second year. Whether he will be a successful US president can not be asserted now; but it is certain that he is definitely the most controversial president in American history.
In the first year of the presidency, with the support of the Supreme Court and the Republican Party’s superior seats in both houses of Congress, Trump ignored the domestic and international attacks and successfully implemented a travel ban mainly for Islamic countries and withdrew from the Paris Climate Agreement. And the tax cut reform, fulfilled some of his own campaign promises.
The first use of Article 201 in 16 years
At the beginning of the second year of the presidency, Trump began to push forward another important campaign promise: high tariffs on imported goods to protect American businesses and encourage US manufacturing. Just last week, Trump officially launched Article 201 on Trade Protection, announcing a tariff of up to 50% on imported washing machines and a tariff of up to 30% on imported solar panels. Washing machines and solar panels have become victims of Trump's trade protection policy.
What is Trade Protection Article 201? In 1974, Section 201 of the US Trade Law stipulates that the US International Trade Commission (ITC) can investigate imported goods and determine whether it poses serious damage or damage to US industrial interests, and then recommends that the President take Measures to impose temporary punitive tariffs on imported goods. And the 301 clause we are familiar with is a punishment for a specific country. Although the United States has repeatedly used Section 301 for Chinese imports, the last time it used Article 201 to protect the entire industry, it also dates back to President George W. Bush in 2002.
Specific to the washing machine tariff war, the former reason is that the US washing machine manufacturer Whirlpool filed a complaint with ITC in the first half of last year, requesting an investigation into imported products. Although the preliminary investigation was completed by ITC, the final decision was in the hands of the president. Since 2012, ITC has confirmed that there are dumping actions by Samsung and LG three times in Whirlpool's complaint, but they have not finally adopted punitive tariffs.
It is worth mentioning that President Obama of the former Democratic Party. There is an interesting phenomenon in American politics. No matter which party candidate, the failure of the foreign trade measures that always attacked the current president during the campaign period led to the sluggish domestic manufacturing industry, and promised to take strong measures to protect the domestic industry and expand employment. But after they come to power, they will still be slammed by the next candidate for the election. Bush is like this, Obama is like this, and Trump is the same.
In order to attack the Republican government’s trade policy failure, Obama once criticized the North American Free Trade Agreement (NAFTA, the trade agreement that Trump repeatedly threatened to withdraw) during the 2008 presidential campaign, and even threatened to be overseas. Investing US companies take punitive measures. In order to compete for the swing state vote, Obama and the Democratic Party have even vowed to use the exit clause to protect the traditional manufacturing industry in the Midwest. It sounds similar to Trump.
Many people questioned and worried about whether Obama would oppose free trade at the time, but they all thought about it. Although Obama used 301 clauses to impose punitive tariffs on Chinese tires, photovoltaics and other products during his tenure, his eight-year presidential term is based on free trade. He not only recognizes and supports the North American Free Trade Agreement, but also promotes pan-country. The Pacific Free Trade Agreement (TPP) has never used clause 201.
In fact, it is not important that Obama is a free trader. Even if he from Illinois wants to protect the already deteriorating manufacturing industry in the Midwest, his Democratic Party and the electorate's voter and representative consortium will not allow him to turn to trade protection. Under the three-dimensional system of three powers, the US president is not a dictator who is bent on his own. Obama is not, Trump is not.
The biggest beneficiary of promoting free trade is clearly the deep blue state on the east and west coasts of the United States. Here is the Democratic Party's iron ticket warehouse, which is home to many multinational corporations with great overseas business, especially in the financial services, high-tech and entertainment industries. During Obama's administration, he maintained a good and close relationship with Silicon Valley. During the 2016 presidential election, these multinational technology giants also stood in the camp of Hillary almost in unison.
The Republican Party's loyal voters base is mostly in the central and southern parts of the United States, representing the interests of traditional industries such as manufacturing, energy, steel, transportation, military, and agriculture. When Trump was running for the presidency, in addition to stabilizing the Republican traditional ticket warehouse, he put more speeches on the Great Lakes region of the traditional manufacturing base in the United States. The use of clause 201 is not only part of Trump’s commitment to the campaign, but may also kick off the US comprehensive trade protectionism policy for at least the next three years.
The Great Lakes region dominates the presidential campaign
Under the unique electoral college system of the US presidential campaign, both the Democratic Party and the Republican Party have their own solid votes and stable votes. In fact, the final result of the presidential election depends on the backwardness of several swing states. Trump's ability to defeat Hillary Clinton was based on the election of a number of swinging electoral votes, especially in the Great Lakes region of the United States. Wisconsin, Michigan, Indiana, Ohio, and Pennsylvania, Trump, who was squandered by the mainstream media, swept the electoral votes of these traditional American manufacturing bases, and achieved the Republican candidate Roma, who had both political and political talents four years ago. What he couldn’t do, he won the election and entered the White House.
Although it used to be a traditional manufacturing base in the United States, the Great Lakes region is no longer the same today. Now there is an image nickname: the Rust Belt. Under the impact of economic globalization, a large number of factories in the Great Lakes region of the United States closed down, machines were rust-stained, workers were unemployed, and the economy fell into recession. This is in stark contrast to the economic growth of California, Washington and New York on the East and West coasts.
An obvious example is that the voters of the Great Lakes region once firmly supported Obama, who held the banner of Yes and We Can in 2008 and 2012, hoping that this young black man in Illinois can bring about change. But in 2016, in addition to Obama's base camp in Illinois, the Great Lakes region has consistently turned to Trump's Republican Party. Perhaps the disappointment of the Democratic Party’s trade policy is the key reason why they turned to Trump, who supports the main trade protection policy. It is worth mentioning that Wisconsin, Michigan and Pennsylvania are the first to support the Republican Party for more than 30 years.
Why did Trump not change his attitude like Obama after he took office, but faithfully fulfilled the US's priority commitment and adopted trade protection measures? Western politics is based on votes and is the interest group behind it. Although Trump is not a traditional Republican (he has joined the Democratic Party and has withdrawn from the Republican Party many times), he is unable to leave his support for the electorate foundation and the party foundation.
Trump’s chilling entry into the White House relied on the votes of the rust zone of the Great Lakes region (he won 77 electoral votes in these states, and the total number of votes was 74 more than Hillary). He must also fulfill his promises, adopt practical policies to protect the US manufacturing industry, and stabilize his voter base in the Great Lakes region. As long as they continue to receive electoral votes from these states, no matter how the outside world and the media attack Trump, he still has a good chance of being re-elected in 2020. The Democratic Party will no longer be able to take over the deep blue states and the total votes of the East and West coasts.
The interesting phenomenon is that although Trump's support rate in various opinion polls has hit a new low in the past few years, it has remained at around 35%. And this 35% is precisely from his loyal ticket holders. Since the populations of the states and the electoral votes are not completely proportional, the population of the Deep Blues supporting the Democratic Party is far more than the Republican Red Crisis. For the same reason, although Hillary lost the presidential election, the total number of votes was nearly 3 million.
The top three fights in the US washing machine
The topic returned to Trump's washing machine trade war. Trump launched the 201 clause, plans to impose a 20% tariff on 1.2 million imported washing machines per year in the next three years, and impose a 50% tariff on the excess; and impose a 50% tariff on imported washing machine parts. Obviously, this protection measure is aimed at Samsung and LG two major Korean manufacturers, the beneficiary is the US domestic washing machine manufacturer Whirlpool.
Walking away from the offline stores of major US electrical retailers, the US washing machine market is actually the three worlds of Samsung, LG and Whirlpool (whirlpool acquired local manufacturers Maytag and Amana), and the three current market shares are 19 respectively. %, 16% and 35%, although Whirlpool shipments are higher than Samsung and LG, but the high-end market is basically dominated by the design, humanity features of Samsung and LG products dominate.
In the past ten years, Samsung washing machines have soared from 1% to 19% in the US market; LG has also maintained a stable share of 15%. Under the impact of Samsung and LG washing machines, Whirlpool filed anti-dumping lawsuits against ITC three times in 2012, 2015 and 2017, but the Democratic government did not impose punitive tariffs on Samsung and LG as Huipu.
General Electric (GE), the traditional symbol of American home appliances, is now ranked fourth in the washing machine market. GE, eager to get rid of this century-old business, first sold its home appliance business to Electrolux for $3.3 billion in 2014, and the deal was rejected by US regulators; it was later sold to China at $5.4 billion in 2016. Haier (after receiving nearly 200 million US dollars in liquidated damages from Electrolux, it can also increase the price by nearly 2 billion to Haier, and GE is really a win-win situation.)
Whirlpool's headquarters is located in Michigan, the Great Lakes region, and its washing machine factory is located in Ohio. It employs more than 3,000 workers. This is Trump's most valued swing state constituency, and he once promised "trade protection, made in the USA." Audience. This can also explain that Whirlpool has finally received support from the Trump administration after three consecutive complaints in the past five years. The US trade representative did not lose the opportunity to add a beautiful word. "The president’s move once again shows that the Trump administration has always defended the interests of American workers and peasants."
Whirlpool's share price soared last week
After Trump announced a high tariff on imported washing machines, Whirlpool's share price has soared nearly 10% in the past week, and manufacturing workers in Michigan headquarters and Ohio are thriving. Trump's move undoubtedly gave him a lot of people in the Great Lakes region. Even the Democratic senators in Ohio had to come forward to appreciate Trump.
On the other hand, high tariffs on imported products (based on origin) will also force some multinational companies to open factories in the United States. Trump’s two birds, one stone, fulfilled the campaign promise of “taking trade protection and supporting American enterprises†and fulfilled the policy objective of “attracting investment and expanding employmentâ€.
In fact, before Trump officially announced the imposition of punitive tariffs, Samsung and LG, which had a poor understanding of the ITC survey last year, had already responded, both of which announced their transfer of their washing machine production base to the United States. Trump's tariff protection measures may only be valid for Samsung and LG for one year, but they also increase the labor costs of the two giants in Korea.
Samsung is about to build its first washing machine factory in the United States in South Carolina, USA, and the nearly $400 million factory can attract 1,000 jobs. The South Carolina State, which received this gift, is the traditional ballot box of the Republican Party and is the elector base of Trump. And LG's $250 million US washing machine factory is about to start at the end of this year, also in Tennessee in Chonghong. In addition, LG also quietly raised the price of its own washing machine.
Pave the way for congressional midterm elections
The Great Lakes Region is the focus of this year's Congressional re-election
This year is also the year of the mid-term election of the US Congress. One-third of the seats in the Congress will face adjustments, and it is also a crucial moment for the struggle between the two parties. The Republican Party currently maintains a 51-49 weak advantage in the 100-seat Senate, with 46 seats in the 435-strong House. Whether Trump and the Republican Party can smoothly advance their own policies will depend to a large extent on the distribution of the two parties after the midterm elections this year.
The Great Lakes region has once again become the focus of this midterm election, and Democratic Party members in this region are facing re-election or retirement. If Trump is able to win popular support in the Rust zone through trade protection and economic stimulus measures, it will be able to provide the Republican Party with the most critical support for Senate elections in these states, helping the Republican Party to continue to occupy a dominant position in both houses.
After washing machines and solar panels, Trump may announce more trade protection measures to support US companies. Perhaps the steel industry benefiting from Article 201 in 2002 will become Trump's next support, and this is also the core industry of the Great Lakes region.
Just after the import duties on washing machines were imposed, U.S. Treasury Secretary Nuchin said at the World Economic Forum in Davos that there was a hint of a weak dollar measure to boost US trade. Although Trump subsequently denied that the dollar would be weaker, he had always criticized "the dollar is too strong" and criticized China and Germany for using the exchange rate advantage to make the US cheaper in trade. Without surprises, the US dollar should be expected to weaken during the next three years of President Trump’s tenure.
The US government launched Article 201 for the first time in 16 years (Obama launched the 301 clause investigation on Chinese tires), and issued a banner for trade protection. Trump has more temptations to ask for directions. Regardless of whether Trump’s trade protection measures will be lost in the World Trade Organization (WTO), he has achieved his political goals: to protect American companies, to force foreign investment in the United States, to win the support of the Great Lakes voters, and to consolidate their own The political foundation is to escort this year's mid-term congressional elections.
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