Tariffs won’t cure trade blues
Phas been the biggest advocate of protectionism to occupy the White House since Herbert Hoover. So far, though, the Trump administration has taken a limited, more conventional approach to trade imbalances, using tariffs only to raise the cost of imported materials and products that were allegedly being dumped into United States at below-cost prices.
Now, an independent federal agency that adjudicates trade disputes is urging Trump to broaden the shield that the U.S. already provides domestic solar panel manufacturers against unfair foreign competitors. The International Trade Commission on Tuesday called for the imposition of temporary emergency tariffs of up to 35% on foreignmade solar panels and modules, with no need for proof of dumping or subsidies, in order to give two U.S. companies time to adapt to a surge in imports. The commission is also moving to give appliance maker Whirlpool similar protection against foreign-made washing machines.
It’s easy to be sympathetic to the plight of the two solar-power manufacturers, Suniva and Solar World. Competition from Asian manufacturers has driven dozens of U.S. companies out of business in recent years, and not necessarily for good reason — the United States has penalized Chinese- and Taiwanese-based solar panel manufacturers for using government subsidies and belowcost pricing to boost sales, and the Obama administration indicted Chinese military hackers for allegedly stealing trade secrets from Solar World and other U.S. firms.
Yet if Trump does impose tariffs that raise the price of solar panels and modules, the penalty will ultimately be paid by Americans who convert to solar power. Worse, it could make solar power uneconomic for at least some of those people who might have bought panels for their homes or businesses, hurting installers and the rest of the industry that surrounds solar power. Not only are there more jobs at risk in those companies than there are at Suniva and Solar World, but the U.S. has a strong environmental and strategic interest in shifting to solar power.
Beyond that, temporary tariffs won’t eliminate the advantages that many foreign manufacturers have, including low wages and minimal regulation. The better course is to use trade deals such as the Trans-Pacific Partnership, which Trump abandoned, to attack the systemic problems that tilt the playing field against U.S. companies. Meanwhile, policymakers have to equip current and future generations of U.S. workers with the skills they need to fill the jobs being created now. A four-year tariff may seem like a much simpler way to rescue an embattled U.S. industry. But it’s no real fix, and the costs are higher than the benefits.