January 22, 2018 Read More →

An Anticompetitive Trade Case

The Daily Signal (Heritage Foundation):

An expansive trade case has simmered on the back burner since April 2017 and is now finally on its way to President Donald Trump’s desk for a decision by Jan. 26.

The case involves two failing manufacturing companies—Suniva and SolarWorld—which have petitioned the government for globally applicable tariffs on inexpensive imports of solar cells and panels.

Organzations across the political spectrum, including the Solar Energy Industries Association, have made the case for why the requested tariffs would be harmful for the solar industry writ large.

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Here are a few reasons why rejecting the request for sweeping tariffs would be consistent with Trump’s campaign trail ideals and policy vision for energy dominance.

  1. Innovation.
    There is almost no better way to fossilize an industry than by guaranteeing prices and knocking out the competitors of a select few companies. The only innovation that this spurs is creative ways to lobby the government for new ways to interfere in energy markets.
    Government intervention akin to what Suniva and SolarWorld have requested distorts the incentives that drive companies to find new technological solutions, reduce costs, adapt to changing markets, and develop successful business models.”
    Such intervention would also punish competitive American solar companies in order to keep two failing ones afloat. Refusing new tariffs on solar imports allows the best parts of the solar industry to rise to the top.
  2. Competitiveness.
    Trump should protect competition, not specific competitors. The solar industry in America can provide customers the best, most affordable service to Americans when it is able to access components from the most competitive companies around the globe.
    The proposed tariffs block this access. In essence, they are a massive regulatory subsidy for Suniva and SolarWorld—at the expense of the rest of the solar industry.
    Rather than let the market reward successful companies and technologies, tilting the playing field only breeds competition for more government intervention.
  3. Healthy job market.
    Suniva and SolarWorld argue that global tariffs are essential to their survival and will create thousands of jobs. Using the force of government to eliminate a company’s competitors will almost certainly preserve those company jobs.
    But Trump needs to take a wider view of solar energy jobs. George Hershman, president of Swinerton Renewable Energy, a utility and commercial solar company, noted in a December press conference that in addition to the people he employs directly, Swinerton “purchased over $88 million in steel racking.”
    “One of our largest suppliers is Steel of West Virginia, located in Huntington, West Virginia, as well as Panelclaw, located in North Andover, Massachusetts. We spent $71 million on electrical equipment, like transformers made by Virginia Transformer of Roanoke, Virginia, and Construction Innovations in Sacramento, California.”

There will be negative implications for the rest of the industry and the indirect jobs it creates if the administration bends over backward to shore up two failing companies. The federal government shouldn’t be the arbiter of whose job is more valuable.

More: 3 Reasons Trump Should Pull the Plug on Solar Tariffs

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