For all his rhetoric to win votes, Trump’s actions on trade during his first year had been less alarming than many outside the country had feared – until now.
Diane Bondareff/Invision/AP
Images
SEOUL (Reuters) – South Korea and China protested on Tuesday
against U. S. President Donald Trump slapping steep import tariffs
on washing machines and solar panels in a move that stirred fears
in Asia of more protectionist measures coming out of Washington.
For all his rhetoric to win votes, Trump’s actions on trade
during his first year had been less alarming than many outside
the country had feared – until now.
„It shows that the U. S. administration, after taking its time,
it’s now indeed starting to roll out measures restricting trade
with the idea of living up to the promises made during the
electoral campaign,“ said Louis Kuijs, head of Asia economics at
global consultancy Oxford Economics, in Hong Kong.
„This could very well be just one step of many,“ said Kuijs,
predicting steel and aluminum imports could be on Washington’s
target list.
The United States‘ stance has put a cloud over global trade at a
time when its revival has fueled hopes for a stronger world
economy. But, at least, economists believe the United States will
avoid taking measures that could impact U. S. companies global
supply chains, particularly for cars and electronics.
The tariffs on washing machines, meantime, have dealt a heavy
blow to South Korea’s Samsung Electronics and LG Electronics.
Together they ship between 2.5 million to 3 million washing
machines annually to the United States, with sales of around $1
billion, and they hold a quarter of a U. S. market that has been
dominated by Whirlpool and General Electric Co .
South Korea’s trade minister Kim Hyun-chong said the new U. S.
tariffs violated World Trade Organisation rules.
„The United States has opted for measures that put political
considerations ahead of international standards,“ Kim told a
meeting of industry officials.
„The government will actively respond to the spread of
protectionist measures to defend national interests.“
China, the world’s biggest solar panel producer branded the move
an „overreaction“ that would harm the global trade environment
for affected products.
„The U. S.’s decision… is an abuse of trade remedy measures,
and China expresses strong dissatisfaction regarding this,“ Wang
Hejun, the head of the commerce ministry’s Trade Remedy and
Investigation Bureau, said in a statement on its microblog.
„China will work with other WTO members to resolutely defend its
legitimate interests in response to the erroneous U. S. decision.“
Mexico said it would use legal means to ensure Washington met
international obligations, pointing to compensation envisaged
under the North American Free Trade Agreement.
India has recently re-opened a U. S. dispute, alleging Washington
has failed to comply with a ruling on solar power.
Vietnam has also challenged U. S. anti-dumping measures against
exports of fish fillets, according to a WTO filing.
Whirlpool
The decisions in the two „Section 201“ safeguard cases for
washing machines and solar cells came after the U. S.
International Trade Commission (ITC) found that imported products
were „a substantial cause of serious injury to domestic
manufacturers.“
The tariffs on washing machines exceeded the harshest
recommendations from ITC members, while the solar tariffs were
lower than domestic producers had hoped for.
Trump ignored a recommendation from the ITC to exclude South
Korean-produced washing machines from LG from the tariffs.
Washington will impose a 20 percent tariff on the first 1.2
million imported large residential washers in the first year, and
a 50 percent tariff on additional imports. The tariffs decline to
16 percent and 40 percent respectively in the third year.
A 30 percent tariff will be imposed on imported solar cells and
modules in the first year, with the tariffs declining to 15
percent by the fourth year. The tariff allows 2.5 gigawatts of
unassembled solar cells to be imported tariff-free in each year.
„After a year’s preparation, Trump is ready to take action to
address the huge trade deficit with China and get even,“ said
Zhang Yi, chief economist at Capital Securities in Beijing.
„Last year, we thought nothing would happen, but now China should
not have any illusion about it. If the U. S is using Section 201
to hit you, they will hit hard,“ Zhang added.
Some analysts in Seoul believed Trump was intensifying pressure
on its Asian ally to rely more on him when dealing with North
Korea, while gaining leverage renegotiating a bilateral free
trade pact that Trump has previously labeled as „horrible.“
„Security and trade are linked to each other under Trump,“ said
Choi Won-mog, an international trade law expert at Ewha
University.
A filing published by the WTO on Jan. 12 showed Seoul had already
asked for authorization to impose annual trade sanctions worth at
least $711 million on the United States, in response to the
dispute over washing machines.
South Korea also asked for permission to impose an open-ended
amount of trade sanctions if Washington broke the same rules
again with regard to other products.
Seoul has already demanded compensation because the United States
had failed to meet a Dec. 26 deadline to comply with a ruling
against duties of up to 82 percent it had earlier imposed on
appliances made by Samsung Electronics, LG Electronics and Daewoo
Electronics.
Both Samsung Electronics and LG Electronics expressed concern
over U. S. tariffs, saying they would hurt American consumers and
jobs.
LG Electronics shares ended up 0.5 percent after an earlier
plunge, while Samsung Electronics was up 1.
