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Trump raises temperature in China trade battle with new tariffs

Donald Trump has approved broad tariffs on imports of solar cells and washing machines in the first in a series of anticipated moves aimed at cracking down on China and fulfilling his protectionist promises to US rust belt voters.

Employing a rarely-used provision in US law designed to protect domestic manufacturers from "serious injury", Trump on Monday ordered tariffs of up to 50 percent on imported washing machines for the next three years and of up to 30 percent on solar cells for the next four years, most of which come from China.

Both sets of tariffs announced on Monday will phase out relatively quickly. They also include exemptions.

The announcement marks Trump's first major trade action of 2018 and follows his campaign promise to get tough on America's trading partners.

"The president's action makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses," said Robert Lighthizer, the US trade representative.

The decision comes after the independent US International Trade Commission (ITC) determined that imports of solar panels and washers had hurt American companies.

The move drew an angry reaction from solar industry groups who had opposed the tariffs on the grounds that the resulting higher costs would hurt domestic installers and companies that rely on imported cells and lead to job losses.

The Solar Energy Industries Association said that the tariffs would cause 23,000 installers, engineers and project managers to lose their jobs this year as billions of dollars in planned investment evaporates. Up to one third of the 260,000 Americans currently employed in the industry are at risk because of the tariffs over the longer term, the group said.

Environmentalists also bemoaned the decision, which they described as a setback for the further development of renewable energy.

Adding to their anger was the fact that Suniva, the bankrupt company leading the push for tariffs, was majority-owned by Chinese investors and had been joined by the US subsidiary of bankrupt German company SolarWorld.

The tariffs had been sought by US-based manufacturers who have complained that they have been hurt by a surge in imports in recent years. Suniva and SolarWorld filed separate cases last year calling on the Trump administration to take extraordinary action.

"We are still reviewing these remedies, and are hopeful they will be enough to address the import surge and to rebuild solar manufacturing in the United States," said Juergen Stein, chief executive officer and president of SolarWorld Americas.

Alan Deardorff, a trade expert at the University of Michigan, said that these temporary tariffs are meant to provide "breathing room" for industries trying to adjust to a surge in foreign competition.

However, Howard Crystal, a senior attorney with the Center for Biological Diversity, said, "If Trump really wants to put America first, he should reduce our reliance on polluting energy sources that fuel climate change. Instead, this profoundly political move will make solar power more expensive for everyday Americans while propping up two failing, foreign-owned companies."

In the case of washing machines, Trump acted in response to a petition from Whirlpool, which complained about low-cost competition from rivals Samsung and LG.

The first 1.2 million washing machines imported each year will face a 20 percent tariff, with additional imports facing a 50 percent tax. Under Monday's announcement, parts also will be hit with a 50 percent tariff.

South Korean companies LG and Samsung have appeared resigned to the tariffs and are now building domestic plants in South Carolina and Tennessee.

Samsung in a statement called the decision "a great loss for American consumers and workers. This tariff is a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices."

LG also added that it was disappointed in what it called a "misguided decision" by Trump.

Whirlpool said that the tariff move would benefit US manufacturing workers.

Both tariff decisions followed years of trade litigation, with frustrated US companies complaining of trade actions that amounted to "Whac-a-Mole" campaigns to remedy unfair foreign trade practices.

In the solar panel case, massive Chinese government subsidies and industrial planning were blamed for a surge in China's production of solar cells and modules, and the demise of up to 30 US solar panel makers. China's share of global solar cell production rose from 7 percent in 2005 to 61 percent in 2012, according to the United States Trade Representative.

The solar panel tariff is a blow to China, the primary country from which the US imports solar panels. But it also could put some US jobs at risk. Most of the American jobs related to solar panels involve installation, not manufacturing.

In the dispute over washing machines, the US Commerce Department imposed duties on South Korean washing machine makers Samsung and LG in 2013 in response to Whirlpool's complaints that its rivals were receiving government subsidies and selling their products in the US below the cost of production. In response, the South Koreans shifted production to China to escape the US tariffs.

In 2017, the US Commerce Department levied new tariffs on the washing machines arriving in the US from China only to see Samsung and LG shift again, this time to Thailand and Vietnam.

Trump's tariffs also carry some symbolism: Lighthizer's team resumes North American Free Trade Agreement negotiations on Tuesday with its counterparts from Mexico and Canada. Later this week, Trump himself is expected to attend the World Economic Forum in Davos, Switzerland, an event for global elites who promote free trade and oppose protectionist measures like tariffs.

Lighthizer also recently started to renegotiate a trade agreement between South Korea and the United States that he and Trump blame for increasing the US trade deficit with South Korea since 2012.

The tariffs may serve as a harbinger for other upcoming trade decisions. Trump has less than 90 days to decide whether to apply tariffs on imports of steel and aluminum, not to mention whether he will withdraw the United States from NAFTA.

Experts said that Trump's message to other American companies looking for help against foreign competitors is clear.

"If you're an industry that is finding pressure from imports causing you difficulty, come to Uncle Trump, he'll take care of you," Gary Hufbauer, a trade expert at the Peterson Institute for International Economics. said.


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