The Straits Times says

US tariffs: Case of scoring own goal

The decision by United States President Donald Trump to impose steep import tariffs on solar products and washing machines marks the return to an aggressive bilateralism in US trade policy. This should be of concern not only to the countries directly impacted by the move, but also to all US trade partners, not to mention US companies.

To give effect to Mr Trump's decision, Section 201 of the US Trade Act of 1974 was called upon. It was last used in 2002. The section sanctions protectionist measures in cases where imports are deemed to "seriously injure or threaten" US industries. Its most draconian aspect is that it can be invoked even without proof of unfair trade practices. All it takes is for a US company to make a case for import relief before the US International Trade Commission, which the solar company Suniva (now facing bankruptcy) and the white-goods manufacturer Whirlpool were able to do.

The Trump administration's narrative is that aggressive actions on trade are consistent with its "America First" ideology. However, in these particular cases, it is not clear that America's interests are being well served. While the individual companies that petitioned for the action stand to benefit, others stand to lose.

For example, in the case of solar products, many US solar manufacturers depend on imports of panels and other components. Moreover, with the rising adoption of solar as an energy source, thousands of workers in the industry are involved in installation. Little wonder then that the US Solar Energy Industry Association - the industry's largest representative group - has opposed the tariffs. It points out that 23,000 jobs could be lost because of declines in demand and investment. In net terms, the tariffs on solar products are likely to destroy more jobs than they save.

With respect to washing machines, tariffs on imports will hurt US consumers, as well as retailers, some of whom, like Sears, source their house-branded washing machines from overseas.

The countries most affected by Mr Trump's "America First" tariffs - China, South Korea and Mexico - have objected strongly to the measures and vowed to take the matter to the World Trade Organisation. The European Union has also expressed concern at the latest imposition of tariffs and indicated that it will react "firmly and proportionately" if EU exports are also hit.

The Trump administration may believe that protectionist measures make for good politics. But it should be mindful that protectionism can have unintended consequences. As with the tariffs on solar products and washing machines, its victims can include not only foreign countries that are its intended targets - and which can retaliate - but also US companies and hapless American consumers. In imposing these tariffs, the Trump administration has merely scored a self goal.

A version of this article appeared in the print edition of The Straits Times on January 25, 2018, with the headline 'US tariffs: Case of scoring own goal'. Print Edition | Subscribe