Trump Administration Imposes Tariffs on Imported Solar Panels and Washing Machines

This is the first big action action the Trump administration has taken on trade:

“The Trump administration announced Monday that it will impose hefty tariffs on the cheap, imported panels that have driven the rapid expansion of solar power in the United States, a move that industry groups warn will slow the spread of renewable energy and cost thousands of jobs.

The tariffs come as Trump has vowed to take a tough line against cheap foreign imports that are undercutting American manufacturing industries.

The administration also announced it would impose hefty tariffs on imported large residential washing machines. In both cases, inexpensive imports, mostly from China in the case of the solar panels, have undercut U.S. manufacturers, administration officials said. …

But the move also threatens some of the very types of jobs that Trump has vowed to protect. Companies that install solar panels will be faced with the prospect of having to trim their workforces, as the tariff — which starts at 30% on the imported panels and gradually declines each year — threatens to substantially raise the price of solar power in the United States. …”

Here are the details:

“The relief will include a tariff of 30 percent in the first year, 25 percent in the second year, 20 percent in the third year, and 15 percent in the fourth year. Additionally, the first 2.5 gigawatts of imported solar cells will be exempt from the safeguard tariff in each of those four years. …

Following successful trade cases filed by the domestic industry, which levied 40 percent tariffs on Chinese solar imports, China moved production elsewhere and evaded U.S. relief, while maintaining capacity. Today, China dominates the global supply chain and, by its own admission, is looking to increase its capacity to account for 70 percent of total planned global capacity expansions announced in the first half of 2017. …”

This isn’t the first time the US has imposed tariffs on Chinese solar panels:

“The Commerce Department began closing a chapter in a protracted trade conflict with China over solar equipment Tuesday, approving a collection of steep tariffs on imports from China and Taiwan.

The decision, intended to close a loophole that had allowed Chinese manufacturers to avoid tariffs imposed in an earlier ruling by using cells — a major module component — made in Taiwan, found that the companies were selling products below the cost of manufacture and that the Chinese companies were benefiting from unfair subsidies from their government.

The department announced anti-dumping duties of 26.71 percent to 78.42 percent on imports of most solar panels made in China, and rates of 11.45 percent to 27.55 percent on imports of solar cells made in Taiwan. In addition, the department announced anti-subsidy duties of 27.64 percent to 49.79 percent for Chinese modules. …”

More on that here:

“In 2012, the federal government added anti-dumping duties to Chinese solar panels, but manufacturers exploited a loophole that allowed them to bypass the duties by moving final assembly to Taiwan.

When US solar manufacturers tried to get another set of tariffs installed in 2013, Chinese companies moved production to Germany, South Korea, Singapore, and Malaysia. …”

These tariffs are an attempt to rectify that mistake:

“The tariffs unveiled Monday apply to all imported solar photovoltaic cells and modules, the main technology on panels that convert solar energy into electricity.

While the action is targeted at imports from China, Trump’s tariffs apply to all imports, since Chinese manufacturers have moved operations to other countries. …”

While this is good news, the bad news is we have outsourced our trade policy to the WTO:

“The dispute is likely to be settled eventually by the Switzerland-based World Trade Organization (WTO), where China and other countries are nearly certain to challenge the tariffs as a violation of international law.

The provision under which Trump took action has been used rarely, and its tariffs are almost always struck down by the WTO. The last time it was used was in 2001 for steel imports, and the WTO overturned the penalties. …”

China will challenge these tariffs at the WTO. That’s when the moment of truth will come for the Trump administration. It will have to shit or get off the pot when it comes to its rhetoric about globalism.