Trump Fires Latest Shot In Trade Wars - Imposes 30% Tariff On Solar-Panel Imports

President Donald Trump is once again burnishing his protectionist bona fides by slapping imported solar cells and washing machines with 30% tariffs - his most significant action taking aim at the world's second-largest economy since he ordered an investigation into Chinese IP practices that could result in tariffs.

Acting on recommendations from US Trade Representative Robert Lighthizer, Trump imposed the sliding tariffs. Solar imports will face a 30% tariff for the first year, then the tariff will decline to 15% by the fourth year.  It also exempts the first 2.5 gigawatts of imported cells and modules, according to Bloomberg. Meanwhile, washing machine tariffs will fluctuate on a quota-basis.

The news sent shares of First Solar, Sunpower and Canadian solar - all solar cell manufacturers - rocketing higher.

Solar

As the Associated Press explains, solar energy is booming in the US, but installers of solar-power systems have been worried that Trump would undercut them by ordering the tariffs, which will raise the cost of their inventory. These companies previously benefited from the global solar-panel glut, while manufacturers of solar panels outside of China suffered.

One green-technology research firm estimated that tariffs could cost up to 88,000 US jobs related to installing solar-power systems.

However, two US-based subsidiaries of foreign companies have argued that the glut, engineered by China, has harmed manufacturers in other parts of the world.

Import

NOTE: 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.

The decision to impose the tariffs is essentially the first shot in a brewing trade war with China, one expert suggested.

“It’s the first opportunity the president has had to impose tariffs or any sort of trade restriction,” Clark Packard, a trade policy expert at the R Street Institute in Washington, said ahead of the decision. “He’s kind of pining for an opportunity.”

“Trump wants to show he’s tough on trade, so whatever duties or quotas he imposes will stick, whatever individual senators or congressmen might say,” Gary Hufbauer, a Washington-based senior fellow at the Peterson Institute for International Economics, said by email before the decision.

But by raising the cost of solar panels, Trump could deliver a huge setback to the solar energy industry, which has been gaining on oil, natural gas and coal in recent years. As Bloomberg noted, the move could handicap a $28 billion industry that relies on foreign solar panels for 80% of its supply. Fears that Trump would soon impose the tariffs inspired some companies to hoard inventory.

 

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The duties are lower than the 35% rate the US International Trade Commission recommended in October after finding that imported panels were harming American manufacturers. The idea behind the tariffs is to raise the costs of cheap imports, particularly from Asia, and level the playing field for those who manufacture the parts domestically.

Late last year, Trump also slapped a massive 300% tariff on the C-Series jets produced by Canadian aerospace company Bombardier. That tariff was imposed following a complaint from Boeing to the trade commission.

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We await China's (or South Korea's) response...