Please respond to the classmates posts as you have done previously.
MG 491 DB6 CMR’s
CM1:1. Why is Whirlpool’s share price down after 6 months of tariffs? Whirlpools share price is down because of the tariffs on aluminum and steel placed by President Trump in March. These tariffs have caused Whirlpool to have to pay more for their raw materials in order to make their products. This increase in raw materials has forced Whirlpool to increase their prices on their products. This price increase has led to lower consumer demand and millions lost in net income compared to a year ago for Whirlpool.
2. Why did Whirlpool want protection from unfair foreign competition? Whirlpool wanted protection from unfair foreign competition because companies such as LG and Samsung are selling their products cheaper in the U.S. than Whirlpool can. Even though LG and Samsung are having to pay higher shipping costs for their washing machines, they are not hurt by the higher cost of aluminum and steel like Whirlpool. Just last year, Whirlpool sought protection from South Korean products known as the safeguard law. This law, implemented by President Bush in the early 2000’s, requires U.S. companies to prove that it is suffering because of surging imports.
3. Why have prices for washers and dryers gone up? The prices for washers and dryers have gone up because of the U.S./China trade war. The increase in prices for raw materials such as aluminum and steel, from which washers and dryers are primarily made from, has caused an increase in these appliances. The increase is the steepest, according to our article, in at least twelve years. The higher price of raw materials has the direct result of causing washer and dryer prices to increase along with it. Whirlpool has no choice but to raise prices because profits are less than 4% for each washer and dryer sold. They have to make up the difference by raising prices.
4. Why will revenues, employment, and wages shrink in the US appliance market? Revenues, employment, and wages will shrink because the demand for appliances have begun to shrink in response to the rising costs of the appliances due to the higher cost of aluminum and steel. Revenues will shrink because prices on appliances will rise and consumers will not purchase them. Employment and wages will shrink because the demand for appliances will shrink. Employment will decrease with the demand, and the employees that remain will have to take a pay cut for Whirlpool to offset the lost revenue.
5. Will tariffs help Whirlpool compete more effectively in the US appliance market? Tariffs will help Whirlpool complete more effectively. Whirlpool recently sought protection for unfair dumping, which means selling below cost, from companies such as LG and Samsung. In response, LG and Samsung have begun producing their appliances in the U.S. They now must pay fair wages, and all other expenses that U.S. producers must pay in order to do business here. They no longer have an unfair advantage over Whirlpool. This will help Whirlpool to compete more effectively in the U.S. appliance market and make it fairer for them.
CM2: The reason Whirpool’s share price was down after 6 months of tariffs is due to people not being able to afford buying a new washing machine. All the items that go into making a washing machine are imported. The tariffs are still being employed on those items. As long as that continues, the sales will continue to stay lower. Whirpool wanted protection under the unfair foreign competition because of the imports coming in was causing harm to their business. The prices for washers and dryers have went up due to the tariffs that have been imposed. The cost of steel and aluminum continues to rise, and most of the items that go into making them come from overseas, and the tariff is making the products expensive. If the products are not made in the US we will continue to suffer. It would not be as simple as starting a company here and making our own product. A lot goes into that part of it. We don’t have the resources that other countries may have. Something like that would not happen over night. People are now doing repairs on them instead of buying new ones due to the cost. The revenues and wages will shrink because there will not be a demand for new washers and dryers. The demand will continue to decline. It will put many people in jeopardy of not having a job. In the article it talks about how one person opted not to buy some of the major appliances that they were wanting because the prices were so high for a new washer and dryer. People will stop buying new, and learn to fix what they have in order to save money. While the tariffs might have been good for Whirpool in the beginning, I think long term it will not be good for the company. It is costing the US more to keep the tariffs because we are having to pay higher prices. There will not be demand that there once was because of the expense to the consumer. The longer we employ the tariffs, the more it will damage the US economy and will hurt our ties with China. The cost to repair the washers and dryers will also increase due to the demand of just needing to fix the item. Those items will still be imported and cost money. In the article it states that they are working with other countries to try to help, but even by doing that, the manufacturing facilities that we have in the US will still suffer. Until we lift the tariffs and make them more manageable we will continue to see negative impacts on multiple companies. It will not just be companies that suffer, but the consumers themselves. It will be all of us. It is going to drive our economy into a recession. It is turning into the domino effect. You hit one, and it trickles down until they have all fallen. This will continue to have a negative effect until it is changed, and then it still won’t get better over night.
CM3: 1. Whirlpool’s share price is down after six months of tariffs because they are far less profitable because of the tariffs. The tariffs are meant to protect Whirlpool from foreign manufacturers but are simply costing the company millions because of the change in cost of raw materials. The protective tariffs are not working because all of the goods that all companies use to construct appliances are built out of metals that are highly taxed when imports at the moment. This is creating a much more difficult business position for appliance manufacturers because their profit margins have been decreased severely and they already had a very slim margin for profit.
2. Whirlpool wanted protection from foreign competitors because they were able to produce and sell goods for much cheaper than Whirlpool. These tariffs only made it harder on everyone though when imposed because it did not only affect foreign companies exporting to the United States, it affected Whirlpool through higher taxes on raw materials. This did not go as planned and allow for a home advantage for Whirlpool, it rather increased difficulty when attempting to sell goods. Rather than going as planned and excluding foreign companies from profitability in the United States, the tariffs created a more difficult business environment for all involved.
3. Prices for washers and dryers have increased drastically because of the higher costs of raw materials utilized to construct these goods. The profit margins for all companies have been greatly impacted by the trade war instead of simply helping American companies as intended when the tariffs were imposed by President Trump. The only people benefiting from the tariffs at the moment are the towns where new factories are being built or set up to construct goods within the borders of the United States and exclude the need for outside goods. This is hurting the companies though because costs are so much higher than when producing goods in the past.
4. Revenues will shrink in the United States market because people have already began fixing their broken appliances rather than purchasing new ones because the costs have increased so dramatically. This would not be the case if costs for the companies producing the goods were lower but with raw materials being so high due to the tariff war with China, all companies are feeling the affects. This is working out greatly for repair companies though because they are receiving many more repair calls and are performing jobs that cost substantially more than previously when people would simply purchase new appliances. Because of the cut profit margin, employment for appliance manufacturing companies will drop dramatically because the companies will not be able to carry as much labor cost as before because of the change in materials cost.
5. I do not believe tariffs will help Whirlpool compete more effectively in the United States market because they are hindering the company more than they are helping because of the substantial rise in manufacturing costs. This will overrule any possible threat from a foreign company that has potential to outproduce Whirlpool. Dealing with substantial changes in costs is much more difficult than competing with other companies who produce the same goods.