If government and the Business Council truly believe the logic that “Donald Trump gives completely unjustified handouts to corporations so we should too”, the mind boggles at what they’ll do after Trump’s latest protectionist stupidity.
On Monday, Trump ordered tariffs of up to 50% on imported washing machines for the next three years and of up to 30% on solar cells for the next four years: while the first 2.5 gigawatts (GW) of solar cell imports will not be subject to tariffs, that is much less than the size of the US market. In fact, there were about 3.5GW of small-scale solar capacity installed in the US last year alone, along with about twice as much again in large-scale plants.
“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. As protectionism always does, of course, the move will in fact increase costs for washing machines and solar power for people like American workers, farmers, ranchers and businesses. And the US Solar Energy Industries Association said the decision would lead to the loss of up to 23,000 jobs this year and result in the delay or cancellation of billions of dollars in investment in solar projects. Mike Bloomberg tweeted that it would “destroy U.S. jobs, raise Americans’ electric bills and hurt our environment”.
But it gets much, much more stupid. The two US makers who stand to benefit from the tariffs are both bankrupt. Better yet, they’re not really American. Suniva, the bankrupt company that led the “trade relief” process for tariffs, was majority-owned by Chinese investors. The other firms is the US subsidiary of bankrupt German company SolarWorld. It collapsed in May, just a few weeks after Suniva.
Investment bank, Goldman Sachs said in a research note last year that granting the Suniva and SolarWorld petition would increase all-in costs for utility-scale projects by an estimated 30% and would increase prices for residential projects by 15%. “We expect solar installations would fall precipitously in the U.S. on the back of lower returns [resulting from a] higher-priced module,” the firm wrote. In its assessment, Bloomberg New Energy Finance said the Suniva trade relief claims were “riddled with holes and hypocrisies”.
From an Australian point of view, there’s some small comfort in that there’s a major economy that has an even more self-destructive system of protection than our own purgatorial, absurd anti-dumping provisions. But will Scott Morrison and the Business Council follow this Trump initiative as well? They think giving billions in handouts to corporations, blowing out the budget deficit and cutting funding for health, education and defence, all to goose company share prices and give executives higher bonuses, is a good idea. Why not this too?
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