During the 2017 United States election, Donald Trump promised that he would provide better deals for the American consumer as well as bring jobs back home. He ensured this promise by keeping to the America first agenda. He did just that by implementing tariffs against both imported solar panels and dishwashers. His goal is to defend American companies, from imported goods that threaten the livelihood of their workers.
A week after President Trump imposed the tariffs, a Chinese solar manufacturer released its plans to open a plant in the United States, “supplying an unnamed U.S. customer with 1.75 gigawatts of solar panels over about three years” (Ailworth, 2018). The tariff would imply a tax of 30% on all solar panels and cells for the first year, which would then decline in the fourth year to 15%.
These established tariffs were a result of a petition by two solar manufacturers with operations in the U.S. who felt that their business had been cut by a large amount of cheap solar panel imports.
President Trump hoped by imposing these tariffs on washing machines and solar panels, that it would push foreign companies to move their production to the United States, an example of offshoring. The company planning on opening a plant in the U.S. “has committed to investing $410 million, and creating as many as 800 jobs”, at the end of 2019.
Also by imposing these barriers to trade, it could also pose as an incentive for international companies like LG and Samsung to build large manufacturing plants in the United States, resulting in more jobs for Americans.
Since China is a part of the major world marketplace, it accounts for most of the supply of solar panels in the United States. The negative aspect of implementing this tariff which was also opposed by domestic installers is that they believe that they will lose jobs since the tariff will raise solar prices, which would reduce sales.
Another point that can be seen as negative is that although bringing big international solar companies on United States soil, it can simply be too expensive to have American made products. The main reason why companies offshore are to lower operating cost, which simply wouldn’t happen if these companies move to the United States. China has an absolute advantage over the United States since they take advantage of the low labor costs. This absolute advantage means that they can produce these solar panels more efficiently than any other country, therefore dominate the solar industry.
Donald Trump is supporting a resolution that is in the interest of American workers as well as the American consumer.