“Trump declares war on Sun.” That was the snarky headline used this week by the website Now This News. In reality, the President targeted only a slightly less formidable foe: China.
Specifically, despite often repeated fears of a trade war, Trump executed on his “America First” doctrine by declaring new tariffs on imported solar panels and washing machines. Critics fear the move foreshadowsa trade war with China and an end to multinational trade agreements.
This week, U.S. Trade Representative Robert Lighthizer announced that the President had approved recommendations “to impose safeguard tariffs on imported large residential washing machines and imported solar cells and modules”.
USTR made the recommendations based on consultations with the interagency Trade Policy Committee in response to findings by the independent, bipartisan U.S. International Trade Commission that increased foreign imports of washers and solar cells and modules “are a substantial cause of serious injury to domestic manufacturers.”
In 2011, Whirlpool, a domestic manufacturer, filed a petition with the U.S. Department of Commerce (Commerce), contending that washer imports from Korea and Mexico were dumped and subsidized as part of an aggressive downward pricing strategy by the large Korean firms, LG, and Samsung.
In 2015, Whirlpool also sought relief under trade remedy laws after washer imports from China sharply increased.
“The ITC found that U.S. producers had been seriously injured by imports and made several recommendations to the President,” Lighthizer said. “The President’s action makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses in this regard.”
For imports of large residential washers, the President approved applying a safeguard tariff-rate quota for three years with the following terms:
The first 1.2 million units of imported finished washers will be assessed a year-by-year tariff that decreases from 30 to 16 percent over three years. All subsequent imports will face an assessment of between 40-50 percent.
According to the White House, “injury to U.S. washing machine manufacturers stems from a sharp increase in imports that began in 2012.” The ITC found that imports of large residential washers increased “steadily” from 2012 to 2016, and that domestic producers’ financial performance “declined precipitously.”
Also facing nee tariffs are imports of solar cells and modules. It includes 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.
“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,” the White House says.
Among the Administration’s talking points:
From 2012 to 2016, the volume of solar generation capacity installed annually in the U.S. more than tripled, spurred on by artificially low-priced solar cells and modules from China.
China’s industrial planning has included a focus on increasing Chinese capacity and production of solar cells and modules, using state incentives, subsidies, and tariffs to dominate the global supply chain.
China issued the Renewable Energy Law in 2005 to promote renewable energy including solar, followed by capacity targets in 2007. The State Council listed renewable energy as one of seven strategic emerging industries eligible for special incentives and loans in 2010.
China has provided subsidies and financing to its solar companies; has encouraged the development of geographic industrial clusters and components of the supply chain; and has conditioned support on increasing efficiency, R&D expenditures, and manufacturing scale.
Following state-directed initiatives, China’s share of global solar cell production skyrocketed from 7 percent in 2005 to 61 percent in 2012. China now dominates global supply chain capacity, accounting for nearly 70 percent of total planned global capacity expansions announced in the first half of 2017. It produces 60 percent of the world’s solar cells and 71 percent of solar modules.
During this time, U.S. manufacturers have sought relief against unfair trade practices. By 2017, the U.S. solar industry “had almost disappeared,” with 25 companies closing since 2012, the White House says. Only two producers of both solar cells and modules, and eight firms that produced modules using imported cells, remained viable. In 2017, one of the two remaining U.S. producers of solar cells and modules declared bankruptcy and ceased production.
In response, U.S. business groups are banding together to protest impositions on global free trade. The U.S Chamber of Commerce, National Association on Manufacturers, and U.S. Farm Bureau launched a new trade group, Trade for America, on Jan. 25.
The Solar Energy Industries Association, the national trade association of the U.S. solar energy industry, was also critical of the decision.
The decision effectively will cause the loss of roughly 23,000 American jobs this year, it says, and it will result in the delay or cancellation of billions of dollars in solar investments.
“While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. 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,” says Abigail Ross Hopper, SEIA’s President and CEO.
“It boggles my mind that this president would voluntarily choose to damage one of the fastest-growing segments of our economy,” says Tony Clifford, chief development officer, Standard Solar. “This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries of an American taxpayer bailout.”
SEIA estimates that the new tariffs “will eliminate, not add to, American manufacturing jobs.” There were 38,000 jobs in solar manufacturing in the U.S. at the end of 2016, and all but 2,000 made something other than cells and panels.
“There’s no doubt this decision will hurt U.S. manufacturing, not help it,” says Bill Vietas, president of RBI Solar in Cincinnati. “The U.S. solar manufacturing sector has been growing as our industry has surged over the past five years. Government tariffs will increase the cost of solar and depress demand, which will reduce the orders we’re getting and cost manufacturing workers their jobs.”
“This is a bad day for the U.S.,” added Costa Nicolaou, president and CEO of PanelClaw. “What’s most disappointing is that the president sided with two foreign-owned companies and didn’t listen to Americans from across the country and political spectrum who understood tariffs will cause great economic pain for so many families in the solar sector."