By Chao Deng | Photographs by Angela Owens for WSJ

NEWBERRY COUNTY, S.C. -- Just before the start of Donald Trump's first term, this small county with acres devoted to chicken and egg farming made a bid to revive its manufacturing glory days. The timing was perfect: Trump was talking about imposing tariffs on imports, and foreign companies looking to avoid them were open to setting up shop in the U.S.

The county landed Korean manufacturer Samsung Electronics, whose washing machine factory now employs more than 1,500 workers and brings the county $1 million each year in tax revenue. Two other Korean firms followed Samsung to Newberry to supply parts for its washing machines, adding hundreds more jobs for the county.

"I see a day when Samsung invests in a lot more than washing machines in South Carolina," said Rick Farmer, Newberry County's economic development officer. He talks about a "Samsung effect" that includes a residential housing plot that went up shortly after the company's arrival.

Tariffs are once again the thrust of Trump's economic plan for his second term. This past week, he put in place an extra 10% tariff on all goods from China, after putting off his other plans to impose 25% tariffs on Canadian and Mexican imports.

Trump's tariff strategy this time has already exacted concessions from other nations, chiefly on drugs and immigration. He has outlined broader aims for tariffs as well: to correct trade imbalances while giving new life to American manufacturing by compelling big companies to make things in the U.S.

Economists say tariffs can spur foreign companies to set up factories inside the U.S. and can help protect American businesses, which might also then take steps to invest in domestic manufacturing.

The downside of tariffs is higher prices. Both foreign and domestic producers tend to pass along costs to consumers that often result from tariffs, like higher import or U.S. labor costs.

In Newberry, the overall effects of such economic reordering are still coming into full view.

The arrival of Samsung in 2017 created more jobs for American workers. But Trump's tariffs on washing machines raised the cost of the appliance nationwide for American consumers.

"Tariffs can raise output of a particular sector, but it's usually offset by a loss somewhere else," said Ed Gresser, vice president at Progressive Policy Institute and a former economist at the U.S. Trade Representative.

The city of Newberry boasts a quaint Main Street with a historic opera house, the legacy of a once-booming textile business. After the textile industry's downturn in the 1970s, the area fell back on farming and struggled to attract new residents. Today the county has a population of about 39,000, similar to what it was 15 years ago.

Over decades, the county has brought in a handful of manufacturers, including Kraft Heinz, which operates a meat-processing plant here. But the arrival of Samsung represented the biggest economic win yet for the area. Last year, Samsung accounted for 21% of washing machines sold in the U.S., second only to LG's 27%, according to the market intelligence firm OpenBrand.

In 2016, Farmer, the economic development officer, gave Samsung representatives their first tour of a sprawling facility that Caterpillar was leaving due to companywide restructuring. The representatives were taken by the building's large size, including its 50-foot ceilings, according to Farmer.

During his 2016 presidential campaign, Trump pledged to use tariffs. Samsung's interest in a U.S. factory was influenced by his election that year, the Journal has reported.

A spokeswoman for Samsung Electronics declined to comment. The company has previously said the U.S. is one of the fastest-growing markets for home appliances and called building an American facility a " natural choice."

Some local businesses felt an immediate lift. Korean managers and engineers flew in for extended periods, and an influx of workers led to the building of a second hotel nearby. Fusion, one of the few Asian restaurants in the county, added Korean beef bulgogi and a "Samsung" sushi roll to the menu.

"We went through 120 pounds of kimchi every week," said Stanley Lai, the owner's son.

Today, Samsung is still pumping out washing machines and is still hiring. Wages for production line jobs start at $16 to $17 an hour -- more than double the state's $7.25 minimum wage and in line with factory jobs in the area, according to one recruitment firm.

The jobs range from entry-level production roles that require only a high school diploma, to equipment engineers and toolmakers who might have computer skills or experience in manufacturing. Many of the jobs require standing for long hours, with short breaks, and the ability to lift up to 35 pounds, according to Samsung's open job listings.

In a 2022 study commissioned by Samsung, the University of South Carolina estimated that for every 10 jobs the company created in Newberry, 12 additional jobs were created in South Carolina as spending by workers generated demand in retail, healthcare and other sectors. Newberry's annual employment growth rate doubled to 1.6% after Samsung's arrival, according to data from the Bureau of Labor Statistics, although it still lags behind that of South Carolina as a whole.

Jeff Ferry, a proponent of tariffs and economist at Coalition for a Prosperous America, a Washington-based nonprofit representing domestic producers, said Trump's tariffs were key to expanding the U.S. washing machine sector: He estimates they pushed Samsung and LG to announce more than 2,000 jobs on U.S. soil by 2021. Tariffs started in 2018 at 20% then rose to 50% after a quota of 1.2 million imported washers; they expired in 2023.

"Tariffs done right can rebuild our economy," Ferry said.

Samsung has invested $500 million in its Newberry project and is one of the county's largest taxpayers. To encourage Samsung to invest even more, the county capped the company's taxes at $1 million annually for 10 years, Farmer said.

While the additional manufacturing in Newberry created hundreds of jobs and spurred some growth in the county, it didn't transform the local economy. Local businesses on the whole haven't felt a sustained economic boost, in part because many of Samsung's workers live outside of the county. The plant's location, right off an interstate, means that workers tend to disperse after their shifts.

American manufacturing jobs generally aren't as attractive as they were decades ago, partly because the erosion of unions has led to lower wages and fewer benefits, said Adam S. Hersh, an economist at the liberal-leaning nonprofit Economic Policy Institute. Manufacturing salaries today are 7.4% lower on average than private sector wages; in 1980, they were 3.8% higher, according to the Bureau of Labor Statistics.

"These jobs don't provide a clear path to the middle class like they once did," Hersh said.

The tariffs may have led to an additional 1,800 washing machine jobs created by Samsung and other firms. But price increases caused by the tariffs cost U.S. consumers about $1.5 billion annually, according to a study in the American Economic Review, or more than $800,000 per job created.

"Even if there were twice as many jobs, it's a massive sum," said Felix Tintelnot, a professor at Duke University and one of the study's authors.

The study found that the tariffs imposed in January 2018 triggered a nearly 12% rise in washing machine prices that year, or roughly $86 to $92 per washer.

All major brands -- foreign and domestic, including Samsung -- increased washing machine prices, according to the study. Manufacturers that moved washer assembly to the U.S. likely raised prices due to higher labor costs and tariffs they paid to import parts. Domestic brands like Whirlpool likely hiked prices to match foreign competitors.

Tintelnot said washer prices began falling after tariffs were removed in February 2023 and were down 13% by the end of that year.

Ferry, of the Coalition for a Prosperous America, said economists who criticize tariffs are overly focused on costs when what is at stake is the country's ability to produce goods. The jobs are worth it, said Ferry.

"We need every growth industry that we can get," he said.

Write to Chao Deng at chao.deng@wsj.com

(END) Dow Jones Newswires

February 08, 2025 05:30 ET (10:30 GMT)

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