New U.S. tariffs may trigger retaliation from China

Updated 2018-01-24 09:25:01

A misuse of trade remedy measures: MOFCOM

The move by the U.S. to impose extra tariffs on imported solar panels will have a "more severe impact" on U.S. industry and consumers than on China, Chinese industry insiders said.

In case of an escalated trade war, they say, China may fight back by taxing U.S. auto exports to China, among a handful of other countermeasures.

The Trump administration approved a 30 percent tariff on imported solar panel components, with the rate declining over the next four years. Imported washing machines will also be subject to as much as 50 percent in tariffs for the next three years, U.S. Trade Representative Robert Lighthizer announced Monday.

Industry insiders have interpreted the move as targeting China, as the country has been the biggest source of solar components in the U.S. for years.

Liu Chang, the founder of Chinese industry website solar.ofweek.com said that the tariffs rate is within market expectations.

"Dating back to 2012, the U.S. has imposed anti-dumping duties of up to 36 percent on imported panels made from China-made solar cells … It was harsher than this time," Liu told the Global Times on Tuesday.

Since those hefty duties are still effective, the impact of the new tariffs on photovoltaic producers based in China will be very "limited or even negligible," Liu said.

In the past years, some Chinese photovoltaic manufacturers have moved their factories to countries such as Vietnam and Thailand.

As such, "they are the groups that will mostly be affected, and as the order takes effect, their solar exports to the U.S. are likely to slump," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

"But the impact is also not very large, as China's solar industry is mostly driven by domestic demand rather than the U.S. market," he said.

A blow to the U.S. industry

Chinese experts stressed that the new U.S. decision would deal a major blow to its own billion solar industry, while also hurting U.S. consumers' interests and leading to a loss of thousands of American jobs.

A direct result of the move is that the tariffs would increase prices and U.S. consumers will no longer be able to access "low-cost and wide-range" solar hardware, Lin said.

A spokesperson from China-based solar module producer Trinasolar said the U.S.' solar investment and projects will face delays due to the price surge, which in turn will hamper the global competitiveness of the U.S. solar industry in the long-term.

"I'm not sure whether U.S. solar producers' current capacity can catch up with the soaring U.S. demand," Liu said, taking note of a potential supply shortage in the U.S. market.

The Solar Energy Industries Association (SEIA), which represents U.S. solar installers and sellers, said on its Twitter account on Monday that Trump's decision would "cause immediate and severe job losses" across the country.

SEIA claims that some 23,000 jobs, including many in manufacturing, will be lost to the tariffs.

The arrival of the tariff marks the first major step by the Trump administration in 2018 to implement trade protectionism.

Lighthizer said additional trade measures related to other products from China could come in the coming months.

In response, China's Ministry of Commerce (MOFCOM) expressed strong dissatisfaction with the U.S. tariffs on Tuesday.

"The U.S. move is a misuse of trade remedy measures and U.S. companies have been overprotected," said Wang Hejun, head of MOFCOM's trade remedy and investigation bureau. Wang said China will safeguard its legitimate interests together with other WTO members.

Lin highlighted the possibility of a trade war between China and U.S. as trade tensions rise.

"If appealing to the WTO does not settle the dispute, China could also fight back by imposing tariffs on U.S. exports, probably starting with the auto industry, one of the pillar industries of U.S. exports to China," Liu suggested.

Lin also pointed to the 0 billion China-U.S. natural gas and oil deals signed during Trump's visit to China in November, which could be used as a bargaining chip in negotiations with the U.S.

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