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A fair bit of uncertainty surrounds President Donald Trump’s announcement of tariffs on imported steel and aluminum. Trump said he wanted a 25 percent tariff on steel and 10 percent on aluminum, but the White House gave no additional details, such as whether any countries might be exempted.
It’s also unclear how other countries might respond. Fox Business host Stuart Varney discussed the potential for retaliation, saying American producers of corn or beef might see new tariffs imposed overseas for their products.
That all remained to be seen, but Varney ended with one immediate example he had just learned about.
"Electrolux, Sweden's largest appliance maker, has just abandoned a $250 million investment in the United States because of the steel tariffs," Varney said. "That is retaliation."
We looked at two questions: Did Electrolux cancel plans to expand its plant in Springfield, Tenn.? And does its decision amount to retaliation?
Electrolux said Varney got it wrong. It hasn’t canceled anything.
"It’s not accurate to say that we have abandoned the investment," said Daniel Frykholm, the top spokesman for Electrolux. "We are concerned about the negative impact, financially and on the overall competitiveness of our U.S. operations. Until we have the final order and can understand the details, we are putting our commitment to invest $250 million in Tennessee on hold."
Electrolux buys only American steel for the Frigidaire-brand refrigerators, dishwashers and other home appliances it makes in the United States.
The trade experts we reached said they wouldn’t call Electrolux’s move retaliation precisely because its operations are exposed to changes in the price of steel.
"If steel in the United States is now much more expensive because of Trump’s national security tariffs, then it would be cheaper to make the appliances in another country," said Chad Bown, a senior fellow at the Peterson Institute for International Economics, a pro-trade Washington think tank. "That is a business decision, not retaliation."
Frederick Abbott, law professor at the Florida State University College of Law, said legally, Electrolux’s announcement doesn’t fit the definition of retaliation. Exactly as Varney was saying before he mentioned Electrolux, nations retaliate, not companies.
"Action by a privately owned company would not be considered ‘retaliation’, which would generally be understood to refer to a governmental measure, such as the imposition of tariffs or quotas," Abbott said.
The only gray zone in trade law, Abbott said, is in the case of state-owned industry, for example in China. But Electrolux is owned by a broad range of investors, including American retirement funds such as Vanguard and TIAA, and many others. Electrolux doesn’t fall into any gray zone, Abbott said.
"The decision by Electrolux would not be considered retaliation by knowledgeable trade lawyers and economists," Abbott said.
We reached out to Fox News and did not hear back.
Varney said that Electrolux had abandoned a $250 million investment in an American plant in "retaliation" for steel tariffs announced by Trump.
The statement errs on two points. Electrolux said it had put its plans on hold until it better understood the impact on the price of steel, a key input in the home appliances it makes.
Trade experts said that pause is a business decision, not retaliation. In trade, retaliation is the province of governments that might choose to slap their own tariffs on another country’s goods to get even for new tariffs their companies face.
Electrolux did put its investment on hold, but beyond that basic fact, Varney was off the mark.
We rate this claim Mostly False.
Fox News, Fox and Friends, March 2, 2018
Reuters, Electrolux puts $250 million U.S. investment on hold over Trump tariff hike, March 2, 2018
AB Electrolux, Ownership structure, Dec. 31, 2017
ICTSD Programme on Dispute Settlement and Legal Aspects of International Trade, Cross-Retaliation in TRIPS: Options for Developing Countries, March 6, 2014
Email interview, Daniel Frykholm, head of Group News and Media, AB Electrolux, March 2, 2018
Email interview, Chad Bown, senior fellow, Peterson Institute for International Economics, March 2, 2018
Email interview, Frederick Abbott, professor of international law, Florida State University College of Law, March 2, 2018
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