US (protectionist) import tariffs will hit the whole world

Text by Keith Bradsher and Sui-Lee Wee
New York Times

The liberal administration of Trump is focused directly on Chinese solar panels and South Korean washing machines with new import tariffs. The impact, however, will be felt throughout the world.

The tariffs presented on Monday will be applied to imports of washing machines and solar panels and panels from around the world, not just from China and South Korea. This is deliberate: US trade officials say the Chinese and South Korean companies set up factories in other countries to avoid existing US tariffs.

This means that factories and workers in various countries will be affected, showing how difficult it can be to hit specific targets in the complicated world of modern commerce.

Just to illustrate the complexities, Suniva, one of the US solar companies that lobbied for tariffs, filed for bankruptcy protection last year, citing the effects of Chinese imports. But the majority owner of Suniva is Chinese and the company's US bankruptcy administrator backed the litigation over the objections of Chinese owners.

China and South Korea could take their grievances to the World Trade Organization, which sets up trade disputes. In keeping with its obligations to the international body, the United States would have to withdraw if the organization were to oppose it.

If Washington did not adhere to such a decision, the World Trade Organization could authorize other countries to set similar trade limits. That could raise the question of whether the United States accepts the decisions of the organization. Robert E. Lighthizer, the United States Trade Representative, argued for years that such decisions should essentially be consultative.

China and South Korea have their own leverage, as they are large importers of machinery and agricultural products manufactured in the United States.

China in particular has been a major buyer of soybeans and other commodities from states that supported Mr. Trump in the 2016 elections. And as a huge consumer of world goods, it could easily punish American companies that have international competitors, for example choosing Airbus aircraft over Boeing or punishing General Motors while leaving Volkswagen alone.

But a trade fight would be painful. Both China and South Korea export much more to the United States than they imported, which means that higher tariffs can affect their economies.

The United States accuses China of flooding the market with artificially cheap and subsidized solar panels. But, increasingly, these panels come from other places.

Countries such as Malaysia and South Korea now account for the majority of imports of solar energy from the United States, according to data from the Global Trade Atlas, a database maintained by the research firm IHS Markit.

This is partly because a previous round of US tariffs specifically targeting Chinese solar panels has led these companies to open factories elsewhere. JA Solar and JinkoSolar, for example, have opened factories in Malaysia. Chinese companies still do much of their research and development at home, before shipping materials to other countries for assembly. Completed panels are then shipped to the United States.

Still, spreading the manufacturing base also means that other countries may face job losses and other difficulties thanks to US tariffs, which could galvanize opposition to the movement.
US companies in these industries have also settled in places like Southeast Asia, said Rajiv Biswas, an economist at IHS Markit. "Due to the growing integration of the Asian manufacturing supply chain," he said in an e-mail, "the impact of higher US tariffs on solar panels and washing machines could have broader transmission effects beyond South Korea and China. "

O presidente Trump deve falar aos líderes mundiais reunidos nesta semana no Fórum Econômico Mundial em Davos, na Suíça, onde ele pode deixar de saber se os Estados Unidos têm mais barreiras comerciais para anunciar.
Washington poderia tomar medidas sobre as importações de alumínio ou aço, duas categorias que há muito irritaram as administrações presidenciais anteriores. Também está explorando uma importante ação comercial contra a China voltada para a propriedade intelectual . “As autoridades reguladoras da China não permitem que as empresas dos EUA tomem suas próprias decisões sobre a transferência de tecnologia e a atribuição ou licenciamento de direitos de propriedade intelectual”, disse o escritório do Sr. Lighthizer como parte de um relatório mais amplo na semana passada, sugerindo possíveis ações fortes.

The Trump administration movement, however, leaves room for negotiation.
The rates announced on Monday were not as high as the American companies requested. With washing machines, for example, the higher tariffs will not be put at risk until the United States imports 1,2 millions of finished washers.

He Weiwen, a former Chinese Ministry of Commerce official who is now an influential researcher on trade policy in Beijing, said Chinese politicians reacted with "strong dissatisfaction" with tariffs. But he predicted that China's response initially would be cautious, as authorities wait to see how strong the other actions will be.

"We can not expand into a general trade war," he added.

 

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