The Trump Administration on Monday announced new tariffs that will primarily affect Chinese solar panels and South Korean washing machines.
The new tax is in line with Trump’s “America First” trade policy, which seeks to protect domestic production from cheap imports. Officials say it is the first in a series of several trade-enforcement actions that will be implemented in the coming months.
The Trump Administration is imposing the new tariffs under a 1974 law that allows companies to seek relief if they can prove “serious injury” from a sudden surge in imports.
The new tax on washing machines, which will start at 50%, addresses Whirlpool Corporation’s battle with two South Korean manufacturers. Whirlpool’s stock jumped 3% immediately after the announcement, and the company said it would be hiring 200 new employees.
The tariff on solar panels, which will start at 30%, comes in response to a petition filed by SolarWorld and Suniva, two US-based companies that argue low-cost imports are making it impossible to make a profit. Both companies have filed for bankruptcy protection.
“Today the president is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight,” said Suniva.
The Trump Administration is also considering new protections for aluminum and steel industries.
“The tariffs are aimed mainly at Asian manufacturers…but the Administration announced few exceptions for any countries, indicating a willingness to impose comprehensive new protective policies for US companies against global competition,” reports the Wall Street Journal.
China was quick to complain about the tariff, blasting it as an “abuse of trade remedy measures.” South Korea called the move “protectionist” and “unfair.”
China currently produces 61% of the world’s solar cells (up from 7% in 2005), but the US gets about half of its solar panels from South Korea and Malaysia. In years past, Chinese and South Korean companies have moved production to other countries to evade taxes.
Administration officials say there will be a larger focus this year on attacking China’s trade policy and our massive trade deficit with Beijing. This is something Trump promised to do, but has thus far been unable to accomplish given the complications with North Korea.
The new tariffs will also affect trade with Canada and Mexico, both of which are currently engaged in NAFTA negotiations.
“The president’s action makes clear that the Trump Administration will always defend American workers, farmers, ranchers, and businesses,” said US Trade Representative Robert Lighthizer.
“I applaud the administration for this strong relief,” said Ohio Senator Sherrod Brown, a Democrat who is typically critical of the president.
The solar panel and washing machine actions, both of which are scheduled to phase out over the next four years, will likely face challenges from trading partners before the World Trade Organization – which in past years has judged similar measures as improper.
Meanwhile, solar panel installers in the US argue the move will threaten billions of dollars in investments and lead to thousands of lost jobs.
Ed Fenster, co-founder of California-based solar installer Sunrun, has called on states with “huge solar workforces” to “step up to overcome this federal headwind.”
The US solar installation industry has benefitted massively from low-cost imported panels, which have led to an explosion of growth in rooftop systems on homes and businesses. Since 2010, cheap imports have driven the average cost of solar installations from $7.50 per watt to just $1 per watt.
“While tariffs in this case will not create adequate cell or module manufacturing to meet US demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs,” argues Abigail Ross Hopper, the CEO and President of the Solar Energy Industries Association.
Author’s Note: President Trump is taking this seriously. It’s tough to say at this point, but this could be the first step in a trade war. But nobody dies in a trade war, and China has been in a trade war with us for 30 years – we just haven’t fought back.