Trump faces pivotal decision on tariffs

President Trump is days away from deciding whether to impose trade tariffs or quotas on imported solar panels.

His decision will close a major chapter in a dispute that puts tens of thousands of jobs on the line and has tested longstanding alliances.

The fight has split the solar industry, pitting imperiled companies that manufacture solar panels in the United States and want protection against firms that say tariffs would increase their costs.

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It’s also a test for Trump, who campaigned on a promise to fight for U.S. companies against unfair trade rules. The solar firms backing tariffs say they are the victims of unfair competition from China. 

“This is the president’s chance to take strong action and to put into action what he’s been saying throughout his first year as president,” said Tim Brightbill, a Wiley Rein attorney representing SolarWorld USA.

Observers widely expect Trump will come down on the side of the domestic manufacturers, given his public remarks.

“You know, they dump ‘em — government-subsidized, lots of things happening — they dump the panels, then everybody goes out of business,” Trump told Reuters on Wednesday.

The legal deadline for Trump to take action is Jan. 26. He has said his decision would come “pretty soon.”

Trump has repeatedly criticized China and past administrations for setting up a trade system in which Beijing has been “ripping us off.”

“Right now, unfortunately, it is a very unfair and one-sided one,” Trump said when he visited China last year. “But I don’t blame China. After all, who can blame a country for taking advantage of another country for the benefit of its citizens?”

Solar panels imported from China already have hefty tariffs.

But proponents of new tariffs say Chinese manufacturers get around those trade remedies by establishing operations in Vietnam and Malaysia and exporting to the U.S. from those countries. They’re pushing for a safeguard that would apply to imports from all countries.

Two companies, SolarWorld and Suniva, petitioned for remedies last year under Section 201 of the Trade Act, which gives the president wide-ranging authority to impose tariffs, quotas or other penalties.

The International Trade Commission (ITC) ruled late last year that companies that make the cells and modules that go into solar panels are injured by imports, a necessary finding before Trump can act.

“Trump has said for a long time now that he wants to impose tariffs on imports, and this is his biggest opportunity to date,” said Edward Alden, a senior fellow at the Center for Foreign Relations. “This decision is entirely in the hands of the president. It’s up to him to decide what, if any, sorts of import restrictions to place on solar panels.”

Greg Autry, a University of Southern California professor who co-authored “Death by China,” said the solar case gives Trump a chance to show China that he won’t stand for their unfair trade practices.

Autry’s co-author was Peter Navarro, who is now director of the National Trade Council in Trump’s White House and a key adviser to the president.

“The Chinese are predatory when it comes to markets,” said Autry.

“When the Chinese go into a market, whether it’s toys or personal computers or solar, they take the whole thing. They’re monopoly operators, that’s their strategy. Trump is clearly aware of this,” he continued.

“I believe he needs an opportunity to make a clear statement to the Chinese he won’t tolerate that model any longer and it won’t work. This is the perfect opportunity to do that. The sooner he does that, the better.”

On the other side of the dispute is much of the rest of the solar industry, including installers, software companies and companies that make related products like brackets and electrical systems.

“I’m really hoping that the president has an opportunity to really think about the thousands of people employed in the solar supply chain, and that their jobs are quite at risk,” said Abigail Ross Hopper, president of the Solar Energy Industries Association (SEIA), which represents companies across the solar sector.

“Our companies have been incredibly clear about the impact that high tariffs would have on their businesses.”

SEIA estimated last year that the remedies requested by the solar manufacturer Suniva would threaten 88,000 jobs. It says that even lighter remedies, like what the ITC’s commissioners recommended, could cost the industry tens of thousands of jobs.

Hopper pleaded directly to Trump on Wednesday with a personal letter, which included stories from individuals in the solar business.

“Ironically, the very jobs we all want to grow, American manufacturing jobs, will retract as the number of projects are scaled back significantly,” she wrote. “This is not hype; this is what will happen.”

SEIA and its allies have spent months putting together a coalition to oppose the tariffs, including other energy and business groups, environmentalists and conservatives such as Fox News’s Sean Hannity.

“I think it’s increasingly important to free market conservatives and libertarians who are supportive of trade to stand up and make the case now, because the threat of a retreat from the prevailing trade consensus is more imminent than it has been basically since the end of World War II,” said Clark Packard, trade policy counsel at R Street Institute, a conservative think tank whose priorities include free trade and free-market environmental policies.

“It’s going to be a test case to see how the Trump administration reacts when forced to make a decision,” he said.

The United States has not imposed trade penalties using Section 201 of the Trade Act since 2002, when it used that provision to penalize steel imports. That decision was overturned after the World Trade Organization (WTO) ruled that the global tariffs violated international law.

Trump would likely exempt at least some countries that have free trade deals with the United States, including Mexico and Canada, from the penalties. But other nations are likely to challenge any penalties using the WTO process.