SOUTH ASIA IN A SPIN OVER US TARIFFS ON IMPORTS
Trump’s levies on washing machines from South Korea and solar panels from China threaten global trade
South Korea and China yesterday protested against the US president Donald Trump slapping steep import tariffs on washing machines and solar panels in a move that stirred fears in South Asia of more protectionist measures coming out of Washington.
“It shows that the US administration, after taking its time, it’s now indeed starting to roll out measures restricting trade with the idea of living up to the promises made during the electoral campaign,” said Louis Kuijs, the head of Asia economics at global consultancy Oxford Economics, in Hong Kong.
“This could very well be just one step of many,” said Mr Kuijs, predicting steel and aluminium imports could be on Washington’s target list, according to Reuters.
For all his rhetoric to win votes, Mr Trump’s actions on trade during his first year had been less alarming than many outside the country had feared – until now.
The stance of the United States has also put a cloud over global trade at a time when its revival has fuelled hopes for a stronger world economy. But at least some economists believe the US will avoid taking measures that could affect US companies’ global supply chains, particularly for cars and electronics.
At home, however, the Solar Energy Industries Association (SEIA) said its members expressed “disappointment” at the decision, AFP reported.
The tariffs will cause the loss of about 23,000 American jobs and the cancellation or delay of billions of dollars in solar investment, the group said.
The tariffs will not help to meet US demand, but “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”, said the SEIA president Abigail Ross Hopper.
The tariffs on washing machines, meantime, have dealt a heavy blow to South Korea’s Samsung Electronics and LG Electronics.
Together they ship between 2.5 million and 3 million washing machines annually to the US, with sales of about $1 billion, and they hold a quarter of a market that has been dominated by Whirlpool and General Electric.
Samsung, South Korea’s biggest firm, said the tariffs were “a tax on every consumer who wants to buy a washing machine”, according to AFP.
“Millions of Americans love their LG washers,” said LG Electronics, also taking umbrage at the decision.
“Consumers should be the ones to decide what washers they want.”
Seoul said yesterday it planned to take the issue to the World Trade Organisation, while Beijing expressed “strong dissatisfaction”.
South Korea’s trade minister Kim Hyun-chong said the new US tariffs violated WTO rules, Reuters reported.
“The United States has opted for measures that put political considerations ahead of international standards,” Mr Kim told a meeting of industry officials.
“The government will actively respond to the spread of protectionist measures to defend national interests.”
China, the world’s biggest solar panel producer, branded the move an “overreaction” that would harm the global trade environment for affected products.
“The US’s decision ... is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,” Wang Hejun, the head of the commerce ministry’s Trade Remedy and Investigation Bureau, said in a statement on its microblog.
“China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous US decision,” the commerce ministry warned, without indicating any specific counteraction, AFP said.
Mexico said it would use legal means to ensure Washington met international obligations, pointing to compensation envisaged under the North American Free Trade Agreement, Reuters said.
India has recently reopened a US dispute, alleging Washington has failed to comply with a ruling on solar power.
Vietnam has also challenged US anti-dumping measures against exports of fish fillets, according to a WTO filing.
The decisions in the two “Section 201” safeguard cases for washing machines and solar cells came after the US International Trade Commission (ITC) found that imported products were “a substantial cause of serious injury to domestic manufacturers”.
The tariffs on washing machines exceeded the harshest recommendations from ITC members, while the solar tariffs were lower than domestic producers had hoped for.
The US trade representative Robert Lighthizer said the tariffs were imposed after an “exhaustive” review by the office of the US trade representative and the independent ITC, which determined that producers were badly affected by imports, AFP reported.
Mr Trump ignored a recommendation from the ITC to exclude South Korean-produced washing machines from LG from the tariffs.
Washington will impose a 20 per cent tariff on the first 1.2 million imported large residential washers in the first year, and a 50 per cent tariff on additional imports. The tariffs decline to 16 per cent and 40 per cent, respectively, in the third year, Reuters said.
A 30 per cent tariff will be imposed on imported solar cells and modules in the first year, declining to 15 per cent by the fourth year. The tariff allows 2.5 gigawatts of unassembled solar cells to be imported tariff-free in each year.
“After a year’s preparation, Trump is ready to take action to address the huge trade deficit with China and get even,” said Zhang Yi, the chief economist at Capital Securities in Beijing.
“Last year, we thought nothing would happen, but now China should not have any illusion about it. If the US is using Section 201 to hit you, they will hit hard,” Mr Zhang added.
Some analysts in Seoul believed Mr Trump was intensifying pressure on its Asian ally to rely more on him when dealing with North Korea, while gaining leverage renegotiating a bilateral free trade pact that Mr