Is a U.S.-China Trade War Heating Up?


Adjunct Professor Matt Gold was quoted in a Knowledge@Wharton article where he discussed new tariffs the Trump administration plans to impose on imported solar panels.

The Trump administration has said that it is protecting domestic manufacturers from cheaper foreign goods with its move earlier this week to levy import tariffs on residential washing machines and solar panels. However, it may also be a politically calculated move aimed to please Trump’s political base, according to experts at Wharton and Fordham. Also in the case of solar panels, the import tariffs will lift prices to levels where it would suppress demand and end up hurting the domestic industry, they added.

Monday’s announcement by U.S. Trade Representative Robert Lighthizer levies phased tariffs over four years on imports of solar cells and modules beginning at 30%, and over three years on washers, from 20% for the first 1.2 million imported units to 50% for subsequent units. The tariffs on solar panels follow complaints filed with the International Trade Commission by two manufacturers – Suniva, a Chinese-owned firm based in Norcross, Ga., and SolarWorld Americas of Hillcross, Ore., the U.S. subsidiary of a German firm.

Between the two product groups affected by the announcement, the consequences of the import tariffs on solar panels could be wider and more self-defeating for the U.S. economy as a whole, according to Matt Gold, an adjunct professor of law at Fordham University and a former deputy assistant U.S. trade representative. “Our transition to this renewable energy is going to be slowed down by these tariffs,” he said. “At the same time, anytime you impose trade barriers, you’re helping one part of the U.S. economy but hurting other parts.”

Gold explained why the tariffs on solar panels would have limited upside. “If you’re doing anything that doesn’t involve the actual manufacture of the solar panels, this is going to hurt you because this will cause the prices of solar cells and modules to increase in the U.S. market, and so fewer people will be converting from fossil fuels to solar power,” he said.

Gold clarified that the tariffs, called “safeguard barriers,” are not aimed at improving the U.S. economy, but specifically at “helping one particular small manufacturing sector.” Whenever such safeguards are imposed, “the understanding is that we’re going to hurt the U.S. economy as a whole – equal to or even greater than we’re helping it,” he added. “But for some particular policy reason, we’re still going to help one small sector.”

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