News Analysis

Time will tell if import tariffs lead to more US jobs

The Trump administration's tariffs on washing machines and solar panels, aimed at South Korean and Chinese manufacturers respectively, may be the first shots in the trade wars Mr Donald Trump pledged to wage to protect American manufacturing jobs.

Analysts expect similar measures on steel, aluminium and other imported products from China in particular, which the US President and his advisers have long singled out as having taken unfair advantage of America's open markets while restricting access to the Chinese market for American corporations.

Time will tell if the measures on washing machines and solar panels will create jobs at home in the United States. Industry watchers said South Korean and Chinese appliance makers can get around the tariff by re-routing production to other countries, but American manufacturers welcomed the move. "This is a victory for American workers and consumers alike," Whirlpool Corp chairman Jeff Fettig said in a statement.

Whirlpool, whose factory in Clyde, Ohio, at 3,000 workers and 20,000 washers a day, is the world's largest producer, had sought the tariffs, claiming South Korean firms Samsung and LG had gained market share in the US by selling their machines below production costs.

Dramatic increases in washer imports between 2012 and 2016 caused substantial loss of market share for domestic producers, who suffered losses, the US Trade Representative (USTR) office said in a fact sheet.

A 20 per cent tariff will apply on the first 1.2 million imported washers in the first year, and a 50 per cent tariff on machines above that number. "This announcement caps nearly a decade of litigation and will result in new manufacturing jobs in Ohio, Kentucky, South Carolina and Tennessee," Mr Fettig said.

On the issue of solar panels - aimed mostly at China - the USTR noted imports grew by approximately 500 per cent from 2012 to 2016. "Prices for solar cells and modules fell by 60 per cent, to a point where most US producers ceased domestic production, moved their facilities to other countries or declared bankruptcy," the USTR said. "By 2017, the US solar industry had almost disappeared, with 25 companies closing since 2012."

 
 

On May 17 last year, based on a petition from a firm called Suniva and later joined by a second company, SolarWorld, the US International Trade Commission started an investigation under Section 201 of the US' Trade Act. Ironically, Suniva is majority Chinese-owned, while SolarWorld is a German company's subsidiary.

The USTR's decision was short of the firms' plea for a 50 per cent tariff, with a tariff of 30 per cent instead on imported modules and cells for the first year, and falling gradually to 15 per cent in the fourth year.

But the solar industry is about more than solar panels. The Solar Energy Industries Association (Seia) estimates there were 38,000 jobs in solar manufacturing in the US at the end of 2016, with all but 2,000 making something other than cells and panels. Some 36,000 worked in support industries - metal racking systems, high-tech inverters, electrical products and installation.

Seia , the national trade association for the industry, said the new tariffs, in an industry that has been thriving, would cause the loss of roughly 23,000 American jobs this year, and create delays or cancellations of billions of dollars in solar investments.

Mr Eugene Wilkie, owner of a solar installer in Washington state, tweeted: "We are devastated to learn Trump has imposed a 30 per cent tariff on solar panels, virtually killing the solar industry... The solar industry employs the kind of 'forgotten' Americans whom Trump champions: Small contractors who employ blue-collar workers earning a median of US$26 (S$34) an hour."

A version of this article appeared in the print edition of The Straits Times on January 24, 2018, with the headline 'Time will tell if import tariffs lead to more US jobs'. Print Edition | Subscribe