BREAKING NEWS: Trump Imposes New Tariffs on Imported Washing Machines and Solar Cells - Global Trade Magazine
  January 22nd, 2018 | Written by

BREAKING NEWS: Trump Imposes New Tariffs on Imported Washing Machines and Solar Cells

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  • Section 201 authorizes the president to take action when imports are causing serious injury to domestic producers.
  • The ITC found that US producers had been seriously injured by washing machine and solar imports.
  • By 2016, the domestic producers of washing machines were running multimillion dollar net operating losses.

President Donald Trump has approved recommendations to impose safeguard tariffs on imported residential washing machines and solar cells and modules, based on the findings and recommendations of the US International Trade Commission (ITC).

On June 5, 2017, at Whirlpool’s request, the ITC initiated an investigation under Section 201 of the Trade Act of 1974, covering the years 2012-2016, to determine whether increased imports were a substantial cause of serious injury to domestic producers. The ITC determined that increased washer imports are a substantial cause of serious injury and recommended global safeguard tariffs on large residential washing machines.

On May 17, 2017, based on a petition from Suniva and later joined by SolarWorld, the ITC instituted an investigation under Section 201 to determine whether increased imports were a substantial cause of serious injury to the domestic industry. The ITC determined that increased solar cell and module imports are a substantial cause of serious injury to the domestic industry. Although the Commissioners could

not agree on a single remedy to recommend, most of them favored an increase in duties with a carve-out for a specified quantity of imported cells.

Section 201 of the Trade Act of 1974 authorizes the president to take action, in the form of tariffs, tariff rate quotas, quantitative restrictions or other actions, in response to an ITC determination that increased imports are a substantial cause of serious injury to domestic producers.

“These cases were filed by American businesses and thoroughly litigated at the International Trade Commission over a period of several months,” said Robert Lighthizer, the US Trade Representative. “The ITC found that US producers had been seriously injured by imports and made several recommendations to the president. Upon receiving these recommendations, my staff and I conducted an exhaustive process which included opportunities to brief in person and through public comments, public hearings, and meetings with senior representatives. Based on this information, the Trade Policy Committee developed recommendations, which the president has accepted.”

The ITC found, in the washing machines case, that from 2012 to 2016, imports of washers into the US increased dramatically, causing a substantial loss in market share to domestic producers. By 2016, the domestic producers were running multimillion dollar net operating losses.

In 2011, Whirlpool filed a petition with the US Department of Commerce requesting relief from washer imports from South Korea and Mexico, alleging they were dumped and subsidized as part of a downward pricing strategy by the large Korean firms, LG and Samsung. In 2013, Commerce issued antidumping and countervailing duties on imported washers benefitting from unfair trading practices. In 2015, Whirlpool sought relief under trade remedy laws after washer imports from China sharply increased. In early 2017, Commerce issued an antidumping order on washers from China. This led to another shift in production, this time to Thailand and Vietnam.

The additional duties being levied on imported washers will amount to 20 percent for the first year, 18 percent for the second year, and 16 percent for the third year, on the first 1.2 million units imported. All subsequent imports of washers will be subject to additional duties of 50 percent, 45 percent, and 40 percent for years one through three, respectively.

In the case regarding imported solar cells and modules, the ITC found that from 2012 to 2016, the volume of solar generation capacity installed annually in the US more than tripled, spurred by artificially low-priced solar cells and modules from China. China’s industrial policy listed renewable energy as one of seven strategic emerging industries eligible for special incentives and loans. China has provided subsidies and financing to its solar companies; has encouraged the development of geographic industrial clusters and components of the supply chain; and has conditioned support on increasing efficiency, R&D expenditures, and manufacturing scale. China’s share of global solar cell production grew from seven percent in 2005 to 61 percent in 2012. China accounted for nearly 70 percent of total planned global capacity expansions announced in the first half of 2017. China now produces 60 percent of the world’s solar cells and 71 percent of solar modules.

In response to US manufacturers seeking relief against unfair trade practices, the US imposed antidumping and countervailing duties in 2012, but Chinese producers relocated production to Taiwan and later to Malaysia, Singapore, Germany, and South Korea. From 2012 to 2016, imports grew by 500 percent, and prices fell by 60 percent, and most US producers ceased domestic production, moved their facilities to other countries, or went bankrupt. By the end of 2017, the ITC found, only one US producer of both solar cells and modules, and eight firms that produced modules using imported cells, remained viable.

The additional duties being levied on imported solar cells and modules will amount to 30 percent for the first year, 25 percent for the second year, 20 percent for the third year, and 15 percent for the fourth year. The first 2.5 gigawatt of imported cells are excluded from the additional tariff.