The Department of Commerce recently announced it would impose tariffs—in certain instances, as high as 250 percent—on solar panels imported from China because many companies have been “dumping” products on the American consumer below production cost.
Rather than celebrating the fact that American consumers are being subsidized by the Chinese government, the Obama administration is lamenting the fact that the Chinese “charge unfairly low prices” (this, the exact wording from a CNN piece on the matter). In the process, the U.S. will likely drive up the cost of solar panels and could possibly spark a trade war that could bleed into other industries.
The tariffs will be two-tiered: One group of 61 exporters will be tagged with a 31 percent tariff. The other group will encompass all Chinese producers not currently in the U.S. market. They could be charged a 250 percent rate should they enter the market.
There are a few possibilities. The Chinese companies will almost certainly raise their prices to make up for the tariffs and those interested in solar panels will have to buy more expensive imported or domestic products. Also possible is that the Chinese will impose their own tariffs on other goods that ultimately hurt job creation at home.
Who should oppose this kind of protectionism? For starters, environmentalists, free traders, big businesses, consumers and anyone who thinks mercantilism is a bad idea. The only ones cheering would be the (already subsidized) American solar panel manufacturers who would like to eliminate competition and the Obama administration, which will falsely claim to have “created” jobs when, in fact, it is hurting the majority of American consumers.