Looming trade war
Safeguard tariffs do more harm than good
U.S. President Donald Trump has stepped up his efforts to translate his "America first" campaign slogan into action. On Tuesday he signed into law steep tariffs on washing machines, and solar cells and modules imported from Korea. The rationale for the safeguard tariffs was to protect domestic industries and bring jobs back to Americans.
However, Trump should understand his protectionist step goes against the firmly established global trend of free trade, and runs counter to international standards championed by the World Trade Organization (WTO). His narrow-minded, self-centered move seems to be aimed at rallying Americans behind him and his party before the midterm elections.
The tariff imposition is certainly a misguided policy. It stands little chance of success. There will be no winners, but only losers because the tariffs are detrimental not only to foreign manufacturers, but also to U.S. industries, workers and consumers. If there is any merit of the policy, it would be the populism of Trump who wants to curry favor with his supporters.
In order to justify his action, Trump should prove a link between increased imports of the affected products and the serious harm they have on U.S. industries. But there is no clear link. His claim that the measures will benefit American workers and consumers will soon turn out to be wrong.
Even U.S. Republican Senator John McCain said the tariffs amount to "nothing more than a tax on consumers." The senator of Arizona, a big solar power producing state, apparently reflected skepticism on the U.S. solar power industry.
Trump needs to humbly accept a prediction by the U.S. Solar Energy Industries Association that the tariffs could cut forecast solar installations this year by about 20 percent from 11 gigawatts to 9 gigawatts. If the prediction is right, the U.S. will lose 23,000 jobs, or 8.8 percent of the 260,000 workers in the industry.
The safeguard tariffs will increase the cost of imported solar cells and modules as well as washing machines. This means American consumers have to pay more. They will also be deprived of their choices to buy foreign imports, of which innovation and design are better than American-made goods. As predicted in the solar industry, the punitive action will also bring about mass layoffs in the U.S.
What's more worrisome is Trump's tariff order might lead to a trade war with leading exporters. China, the world's largest solar panel manufacturer, described the move an "overreaction" that would harm the global trade environment for affected products. South Korea has threatened to file a complaint with the WTO against the U.S., saying that the tariffs are a violation of WTO provisions.
Trump should realize that free trade is better than protectionism as all countries will become losers if a trade war erupts.
(END)