Trump Talks Tariffs, Order Shows Opportunity For Exemptions

U.S. Trade Representative (USTR) Robert Lighthizer, not President Donald Trump, initially revealed the president’s decision to impose new tariffs on imported cells and modules under the Section 201 case on Monday. On Tuesday, however, Trump made public remarks alongside Lighthizer during a ceremony in the Oval Office and signed a proclamation, which provides some more details about country exclusions and the opportunity for companies to apply for tariff exemptions.

During the ceremony, which covered the new trade actions against imported crystalline silicon photovoltaic (CSPV) products and residential washing machines, Trump said, “I’m thrilled to be joined by Ambassador Lighthizer as I sign a very important executive action to protect American jobs and American workers.”

According to Trump, “My administration is committed to defending American companies, and they’ve been very badly hurt from harmful import surges that threaten the livelihood of their workers, of jobs, actually, all over this country — many different industries.”

The president said, “For both solar and washing machines, these executive actions uphold the principle of fair trade and demonstrate to the world that the United States will not be taken advantage of anymore. Our companies will not be taken advantage of anymore.”

“[W]e’ll be making solar products now much more so in the United States,” Trump continued. “Our companies have been decimated, and those companies are going to be coming back strong.”

When discussing “panels and products – generally, solar,” the president called the sector a “potentially great industry in this country, but now we’ll be making it in the United States.  Okay. A lot of workers; a lot of jobs.”

In addition, the president noted, “Today, I’m also directing Ambassador Lighthizer to continue supporting industry discussions to resolve duties on these and similar products in the United States and China.”

Exclusions

During Tuesday’s ceremony, Trump signed a presidential proclamation officially setting into motion the upcoming implementation of global tariffs on imported CSPV cells and modules starting at 30%, with an annual exemption for the first 2.5 GW of imported CSPV cells. As previously reported, the tariffs will decline 5% annually after year one of the four-year period afforded under a Section 201 case.

Regarding countries excluded from the new tariffs, the proclamation reiterates some of what the USTR previously explained, including that free-trade partners Canada and Mexico will not be excluded.

Consistent with the U.S.’ World Trade Organization (WTO) obligations, the Trump administration is excluding all Generalized System of Preferences (GSP) beneficiary countries from the global tariffs. As the USTR previously noted, GSP beneficiaries Thailand and the Philippines will not be exempt because they account for more than 3% of total imports. However, the presidential proclamation explains that the tariffs could later be applied to another GSP country or countries if the Trump administration determines there is a “surge in imports.”

Furthermore, the proclamation shows companies will have the opportunity to apply for tariff exemptions on solar products, though there is no certainty such exemptions will be awarded.

The document says, “Within 30 days after the date of this proclamation, the USTR shall publish in the Federal Register procedures for requests for exclusion of a particular product from the safeguard measure established in this proclamation. If the USTR determines, after consultation with the Secretaries of Commerce and Energy, that a particular product should be excluded, the USTR is authorized, upon publishing a notice of such determination in the Federal Register, to … exclude such particular product from the safeguard measure.”

GTM Research recently forecast that the new tariffs will lead to an 11% reduction in installed U.S. solar capacity over the next five years, and many industry stakeholders have condemned Trump’s ruling.

According to multiple reports, some countries subject to the new global tariffs, including South Korea and Mexico, have already indicated plans to challenge the U.S. decision.

A Reuters report cites South Korea Trade Minister Kim Hyun-chong as stating, “It is clear that the latest safeguard measures would violate the WTO rules. We will actively respond to protectionist measures.”

The new tariffs are scheduled to become effective Feb. 7. The presidential proclamation also notes that the decision, technically, is subject to potential changes.

“In addition, if I determine within 30 days of the date of this proclamation, as a result of consultations between the United States and other WTO members pursuant to Article 12.3 of the WTO Agreement on Safeguards, that it is necessary to reduce, modify, or terminate the safeguard measure, I shall proclaim the corresponding reduction, modification, or termination of the safeguard measure within 40 days,” the proclamation says.

Photo courtesy of the USTR’s Twitter account

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