Trump: Stop ‘unfair trading practices’

Source: Christa Marshall, E&E News reporter • Posted: Wednesday, December 20, 2017

President Trump slammed “trading abuse” and “unfair trading practices” yesterday, fueling speculation he is set to slap punitive tariffs on the solar industry and start a global trade war.

Trump unveiled a national security strategy that made numerous attacks on China’s theft of intellectual property and said the U.S. would use all available tools to fight trade imbalances. The document further emphasized nationalist themes and “energy dominance” (E&E News PM, Dec. 18).

While Trump has made similar remarks as part of his “America First” agenda, the comments came as the administration weighs whether to enact trade barriers on solar cells and modules in the next month. In September, the U.S. International Trade Commission suggested various tariff options to Trump to fix a “serious injury” of cheap solar imports from Chinese-backed companies hurting Suniva Inc. and SolarWorld Americas Inc., two U.S. solar manufacturers (Greenwire, Sept. 22).

“The United States will counter all unfair trade practices that distort markets using all appropriate means, from dialogue to enforcement tools,” the White House strategy states. “The United States will pursue enforcement actions when countries violate the rules to gain unfair advantage.”

“We will no longer tolerate trading abuse,” Trump added in a speech at the Ronald Reagan Building and International Trade Center near the White House.

Timothy Fox, a vice president at research firm ClearView Energy Partners LLC,said the comments reinforce his view the administration is likely to enact new trade limits on solar. Trump has until Jan. 26 to make a decision on the case.

“This report speaks about anti-growth policies during the Obama administration and U.S. energy security, two themes that we expect the president to mention if he decides to impose tariffs,” Fox said. Privately, other analysts familiar with the administration say it is prepping for a trade war with China and may use the solar case as an example.

Suniva released a statement after Trump’s speech saying “we support his administration’s strong efforts to protect American manufacturers who are punished for playing by the rules while China and others continue to cheat.”

Earlier this week, Politico also reported that an internal four-page White House document lays the groundwork for punitive trade barriers on solar.

The real battle could be what happens after Trump’s decision, however.

If Trump enacts solar tariffs, it is likely to prompt a challenge at the World Trade Organization and retaliatory measures from China and other affected countries, said Michael Moore, a trade expert at George Washington University.

The U.S. has lost at the WTO every time it has tried to enact tariffs under Section 201, the portion of the 1974 Trade Act at issue in the solar case. When the U.S. tried to slap global duties on imported steel in 2002 under the same law, multiple countries threatened retaliation after a successful WTO challenge. Countries threatened barriers on products such as orange juice that were critical for the economies of swing states.

President George W. Bush lifted the tariffs days before they were set to take effect.

Moore said the same thing likely would play out if Trump acts on the solar industry, even though it might take several years to work its way through the WTO.

“Countries would retaliate to maximum political advantage,” he said. They likely would pick products that “happen to be [made] in swing states,” he said.

A coalition, including most of the solar industry and conservative think tanks such as the Heritage Foundation, is opposed to tariffs. The groups argue tariffs would cost thousands of solar jobs and cause price spikes that would hurt the industry’s growth. Critics say Suniva, which is majority owned by a Chinese investor and in bankruptcy, and SolarWorld are struggling because of their own business practices.

“Foreign-owned companies that brought business failures on themselves are attempting to exploit American trade laws to gain a bailout for their bad investments,” Solar Energy Industries Association President Abigail Ross Hopper said earlier this year.

The solar industry is pushing for an alternative “import license fee” that would be less restrictive than tariffs. It would not go through the U.S. Treasury but instead collect fees on imported components that would be distributed directly to manufacturers.

Fox said he thought the president might support this alternative approach if “he can be convinced” it’s punitive enough against China.