China dissatisfied over US tariffs on solar panels

World
Europe

China has voiced dissatisfaction following US President Donald Trump’s decision on Monday to slap tariffs on imported solar modules and cells and washing machines, saying that such abuse of remedial trade measures would worsen global trade conditions.

Analysts are concerned that the tariffs may trigger a tit-for-tat reaction from nations that are worse hit by the steep hike in import duties, and warn about the possibility of a backlash on US employment in the longer term.

The US will impose a hefty tariff on imported solar panels starting at 30 percent in the first year, and will gradually drop five percent each year over the next three years. In each of these years, the first 2.5 gigawatts of imported solar cells will be tariff-free.

The tariffs on solar panels are expected to hit China hardest. According to the White House, China dominates the market, producing “60 percent of the world’s solar cells and 71 percent of solar modules.”

Reuters Photo

The US accuses Beijing of unfairly subsidizing its solar companies to help them dominate the global supply of solar cells.

Beijing has opposed unilateral trade penalties by the US, and says it hopes Washington will refrain from trade protection measures which may harm the development of a balanced global economy.

The US Trade Representative action also includes a 20-percent tariff on the first 1.2 million imports of large residential washing machines. For imported washers above that quota, the US will impose a 50-percent tariff for the first year only. In subsequent years, the tariffs will decrease in five percent increments.

Analysts warn that this trade action against Chinese products could later include steel and aluminum, an expansion that could spark a trade war.

Reuters Photo.

“The question is, can this get out of hand? If you levy penalties that are seen as significant, then from a Beijing perspective, they need to retaliate in some way,” said Yukon Huang, an expert on China’s economy at the Carnegie Endowment for International Peace.

“The danger of this is cross retaliation,” added Steven Koh, who spent nine years at the US Trade Representative’s office and is now at the law firm, Akin Gump. “The danger is tit-for-tat action… possibly a trade war.”

A US solar industry trade group warns the trade action could boomerang and destroy American jobs.

In a statement, the American Solar Energy Industry Association (SEIA) wrote: “The decision effectively will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing, and it will result in the delay or cancellation of billions of dollars in solar investments.”

SEIA is advising the industry to see the tariff implemented early next month.

“The safeguard statute indicates that a trade remedy is effective 15 days after the proclamation of a remedy by the president,” according to a statement.

President Trump is expected to sign the 201 actions on Tuesday.