What’s behind Trump’s tariffs on solar and washing machines

Advancing his America First agenda, President Trump is imposing:

a 30% tax on imported solar panels and solar energy cells after the first 2.5 gigawatts of solar cells are imported; and
a 20% tax on the next 1.2 million imported washing machines and a 50% tax on any additional washers imported in the next two years.
Who will these new taxes benefit?

1) U.S.-based solar manufacturers

Tesla is just about the only big U.S.-owned manufacturer of solar products in the U.S. However, it relies on imported solar components — much of which are exempt from the tariffs. The other U.S. manufacturers that will benefit are behind the tariff, as they petitioned Trump for help competing with foreign imports. But these manufacturers are actually owned by foreign entities, including Suniva and Solar-World, with owners based in China and Germany, respectively, according to NPR.

2) Current solar owners

When the cost of solar rises, it’s possible homeowners and business owners who already had solar installed before the cost rose may benefit. Since installing solar will become more expensive, the only way for some homebuyers to get a solar home will be to buy one with solar already in place.

3) U.S.-based washing machine manufacturers

U.S.-based Whirlpool is behind the request for the tariff on imported washing machines. Following Trump’s tariff announcement, Whirlpool announced it would be creating 200 more jobs in its Ohio facility.

4) Manufacturing states

Any new jobs these tariffs create will be in manufacturing states in the southern and Midwest states where labor is cheap (and where most of these companies are located). The exception is Buffalo, New York, where Tesla’s solar plant is located.

Who will these taxes harm?

1) Solar installers

Homeowners and business owners who install solar have, until now, been able to do so relatively cheaply due to the low cost of solar imports from overseas. Going forward, some solar components will now cost around 30% more. As a result, more expensive solar panels will become less attractive and fewer installations will occur. This will hurt workers in the solar industry. The Solar Energy Industries Association (SEIA) estimates 23,000 jobs will be lost in the solar industry in 2018 and solar industry growth will slow overall.

2) People who like clean clothes

The difference between solar panels and washing machines is that no one needs solar, thus sales will undoubtedly slow following the increase in prices. But people still need washing machines — they will just have to pay more for them. Shortly after the tariffs were announced, LG announced its washer prices would increase, likely amounting to washing machines $70-$100 more expensive. Samsung, another big player which manufactures overseas will likely also increase prices.

3) Sunny, coastal states

The biggest harmful impact will be felt in the states where solar growth has been largest, especially California. The job losses in the solar industry will be hardest felt here, and homeowners who install solar will now be paying more. All of this will be a drag on the economy, and eventually home sales.

Editor’s note — For a look at how other tariffs on foreign imports imposed by the Trump administration have impacted housing, recall the Canadian lumber tariff put in place in 2017. The National Association of Home-builders (NAHB) called the tariff a “thinly-disguised tax on American home buyers, home builders and consumers.” For comparison, the price of composite framing lumber has jumped 20% from July 2017 when the tariffs were announced to November 2017.

By Carrie B. Reyes www.firsttuesday.us



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