U.S. Imposes New Tariffs, Ramping Up 'America First' Trade Policy

By FeaturesDow Jones Newswires

President Donald Trump slapped steep tariffs on imports of solar panels and washing machines, kicking off his second year in office by showing he is ready to start implementing his long-promised "America First" trade policy.

The moves were announced Monday in response to U.S. industry pleas for relief from a recent flood of cheap imports and are the first of what administration officials said would be a series of trade-enforcement actions in the coming months.

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The tariffs are aimed mainly at Asian manufacturers -- Chinese makers of solar panels and South Korean producers of washing machines. But the administration announced few exceptions for any countries, indicating a willingness to impose comprehensive new protective policies for U.S. companies against global competition. The new curbs also would affect trading partners from Mexico and Canada to Europe.

"The president's action makes clear again that the Trump administration will always defend American workers, farmers, ranchers, and businesses," U.S. Trade Representative Robert Lighthizer said in a statement.

The president plans to hold a signing ceremony of the measures in the Oval Office Tuesday, publicly touting his newly muscular trade-enforcement policy three days before he plans to explain that approach to a skeptical audience at the World Economic Forum in Davos, Switzerland.

Specifically, the administration said it would impose tariffs on washing machines at a rate of up to 50%, with the rates phasing out over the next few years. The tariffs would be combined with quotas. Tariffs on solar modules would be as high as 30%, and also would phase out over time.

The solar petition was filed by Suniva Inc. and SolarWorld Americas Inc., two embattled solar panel makers with operations in the U.S. that have filed for bankruptcy protection.

The washing machine petition was filed by Whirlpool Corp., which is locked in a tough competitive fight with Samsung Electronics Co. and LG Electronics Inc., both of South Korea. Whirlpool's stock rose 3% in after-hours trading in response to the move, which was announced after U.S. markets closed.

The actions drew criticism from free-market economists warning of new costs to consumers and the dangers of trade wars. But it drew praise from some Democrats normally critical of the president, showing the potential of the new Trump trade policy to scramble the political landscape this year.

"I applaud the administration for this strong relief," said Ohio Democratic Sen. Sherrod Brown, who faces a tough re-election fight in a hard-hit manufacturing state that Mr. Trump carried in the 2016 election.

Some of Mr. Trump's fellow Republicans weren't as sanguine. "Here's something Republicans used to understand: Tariffs are taxes on families, " Nebraska GOP Sen. Ben Sasse said in a statement.

Trading partners were quick to complain. China's Commerce Ministry blasted the tariffs as an "abuse of trade remedy measures." The Mexican government said it will use "all legal resources at its disposal" in response.

Mr. Trump has long promised to pursue a harder trade line by dusting off little-used trade laws that had largely been avoided by his predecessors, especially since the 1995 creation of the World Trade Organization, whose goal has been to discourage such unilateral actions by nations.

The Trump administration is imposing the new barriers under a 1974 trade law that permits companies to seek relief if they can prove "serious injury" from a sudden surge in imports. That "safeguard" law was last invoked by the George W. Bush administration in 2002 to protect steelmakers, but it later removed the steel tariffs after the World Trade Organization deemed them improper.

No president has considered such protections since then. Now the Trump administration has taken up two "safeguard" cases, and with the president approving new tariffs in both cases, more industries are expect to follow in seeking similar relief.

In addition, the administration is weighing new protections for the steel and aluminum industries in the name of national security, invoking a law that hasn't been used since the 1980s. Decisions are expected by April.

Officials also are expected to announce soon recommendations for potential sanctions against China in retaliation for allegedly forcing U.S. companies to turn over valuable intellectual property.

Indeed, administration officials say that there will be a much greater focus this year on attacking Beijing's government-steered trade policy, and the $300-billion-plus annual U.S. trade deficit with China.

While Mr. Trump had been extremely critical of Chinese trade policy during the presidential campaign, he largely held back from taking action last year, in part because he was seeking cooperation in reining in North Korea's nuclear arms program.

"If you look at solar closely, you have a clear example of Chinese industrial policy propping up an industry, creating excess capacity in an industry, there being significant harm to the United States and globally as well," a White House trade official told reporters. "We need to figure out how to deal with that, not just for the solar industry, but for a lot of different industries where you're going to see the same playbook trotted out."

Both the washing machine and solar actions are likely to face a challenge from trading partners before the WTO. Since the organization's creation, the U.S. has invoked the safeguard law six times. Each action has been taken to the trade courts in Geneva, which often have deemed them improper.

South Korean Trade Minister Kim Hyun-Chong said at a meeting with local business and industry leaders in Seoul Tuesday he would file a complaint against the latest "protectionist" and "unfair" U.S. safeguard measures to the WTO.

Under the trade rules invoked by the Trump administration Monday -- Section 201 of the 1974 trade act -- Suniva, SolarWorld, and Whirlpool first needed to get approval from the independent U.S. International Trade Commission to declare that they qualified for safeguard relief.

The four-member panel voted unanimously in both cases to support the petitions, and then recommended to the White House late last year that it impose some form of protection for the domestic industry. The Monday announcement came days before the White House faced a legal deadline to respond to the ITC recommendation.

In anticipation of the Trump move, foreign makers of both washers and solar panels ramped up exports to the U.S. at the end of 2017 to get ahead of the barriers, and consumers could now see a sudden drop in supply.

The remedies imposed by the administration fell short of requests from the solar and washing-machine makers, which had both sought steeper tariffs. But both groups praised Mr. Trump for his actions. Suniva thanked the Trump administration "for holding China and its proxies accountable."

"Today the president is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight," the company said.

Whirlpool Chairman Jeff M. Fettig issued a statement thanking the Trump administration and calling the washing machine decision "a victory for American workers and consumers alike."

U.S. solar-panel installers, who have benefited from the surge of cheap imports, attacked the decision.

Ed Fenster, co-founder and executive chairman of Sunrun Inc., a solar installer based in California, called on "states with huge solar workforces, from South Carolina to California" to "step up to overcome this federal headwind" with offsetting policies.

The Solar Energy Industries Association, a group that represents installers and others across the solar industry, and which opposed the protection petition, estimates that the tariffs imposed by the Trump administration will cost 23,000 jobs this year and result in the delay or cancellation of billions of dollars in solar investments. "They will create a crisis in a part of our economy that has been thriving," said Abigail Ross Hopper, president of the association.

South Korea's LG Electronics Inc., in a statement, said it was "very disappointed in this misguided decision," adding that; "this is a textbook case about how certain companies can game the process to use trade laws to try to accomplish what they can't accomplish in the marketplace."

In both the solar and washing machine cases, the U.S. industry had earlier won protection from imports under more commonly used trade laws designed to offer protection against goods that are improperly subsidized, or "dumped" -- sold unfairly below cost.

But in both cases, they said that foreign rivals simply shifted production to other countries to avoid the tariffs, prompting the demands the Trump administration provide bigger, blunter trade protections provided under the safeguard law.

--Andrew Tangel contributed to this article.

Write to Jacob M. Schlesinger at jacob.schlesinger@wsj.com and Erin Ailworth at Erin.Ailworth@wsj.com

(END) Dow Jones Newswires

January 22, 2018 22:20 ET (03:20 GMT)

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