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Is a US-China Trade War Heating Up?

The recently announced import tariffs on solar panels and washing machines could be a precursor to bigger trade clashes between the US and China.

The Trump administration has said that it is protecting domestic manufacturers from cheaper foreign goods with its move earlier to levy import tariffs on residential washing machines and solar panels. However, it may also be a politically calculated move aimed to please President Donald Trump’s political base, according to experts at Wharton and Fordham. Also in the case of solar panels, the import tariffs will lift prices to levels where it would suppress demand and end up hurting the domestic industry, they added.

 

 

Instead of getting into what could be a trade war of attrition, the US should sit down and hammer out mutually acceptable trade policies with China — and also with Mexico — the experts advised.

The announcement by US Trade Representative Robert Lighthizer on January 22 levies phased tariffs over four years on imports of solar cells and modules beginning at 30%, and over three years on washers, from 20% for the first 1.2 million imported units to 50% for subsequent units. The tariffs on solar panels follow complaints filed with the International Trade Commission by two manufacturers: Suniva, a Chinese-owned firm based in Norcross, GA., and SolarWorld Americas of Hillcross, OR., the US subsidiary of a German firm.

Between the two product groups affected by the announcement, the consequences of the import tariffs on solar panels could be wider and more self-defeating for the US economy as a whole, according to Matt Gold, an adjunct professor of law at Fordham University and a former deputy assistant US trade representative. “Our transition to this renewable energy is going to be slowed down by these tariffs,” he said. “At the same time, anytime you impose trade barriers, you’re helping one part of the US economy but hurting other parts.”

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