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Trump’s First Major International Trade Fight with China could be over Solar Panels

 The solar panel dispute comes at a time when senior administration officials have been signalling their intention to take a much tougher trade stance toward China, where most solar panels are made. Major manufacturers in the United States and China, as well as numerous other businesses that buy and use solar panels, are readying for a clash that could begin as soon as January.

The solar panel industry could be US President’s first test of whether his harsh language toward China will result in significant trade measures — and whether those moves would help restore American businesses. Factories in China now account for more than two-thirds of the world’s production, up from a negligible share a decade ago.

China’s push to become a major maker of solar panels has driven down global prices by close to 90 percent over the past decade, helping international efforts to curb emissions of planet-warming greenhouse gases. That has blurred the lines over the pending solar trade fight even within the United States, where American manufacturers are squaring off against American installers and users of the panels.

American manufacturers say the cheap panels have been unfairly financed by the Chinese government. Chinese manufacturers have benefited from cheap loans from government-run banks. Even some Chinese companies that have struggled with losses and had trouble making loan payments have been able to stay afloat.

The United States has already imposed tariffs on solar panels from China over the past five years, prompting Chinese manufacturers to build vast factories in Southeast Asia. Now, the Trump administration has indicated it may raise the stakes by authorizing tariffs on all solar panel imports, including those from Southeast Asia.

Administration officials have so far allowed two solar panel companies with factories in the United States to ask Washington for tariffs on all solar panel imports.

Solar panel installers, developers of utility-scale solar panel power generation projects and others connected to the industry also oppose broader tariffs. The Solar Energy Industries Association, which represents those groups, contends that the tariffs would destroy more installation jobs than they would protect or create among manufacturers.

If the Trump administration decides to impose more tariffs next month, it could be the first blow in a one-two punch to China on trade, making it even more likely that Beijing might retaliate against American exports. The deadline for the administration to act on possibly imposing tariffs on washing machines from around the world, and particularly from China, comes a little more than a week later, on Feb. 3.

Mr Li, the Chinese economic adviser, contended that China, not the United States, was the country that had proved willing to let market forces determine winners and losers in the solar panel market. China had 800 solar panel companies a decade ago and now has just 70 or 80, after allowing the rest to become insolvent. Yet China’s solar panel production has more than quintupled in the past decade because, he said, Beijing has allowed market forces to winnow the industry to the most efficient competitors.

 Source: NYTimes

Vaibhav Jain

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