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Trump tariffs will cost American jobs

Updated
Texans know when it comes to trade agreements like NAFTA, the answer is to mend it, not end it. President Trump must be urged to recognize the agreement's importance to our state, because the alternative would be deterimental to the Texas and American economy. (Lars Hagberg / AFP/ Getty Images)
Texans know when it comes to trade agreements like NAFTA, the answer is to mend it, not end it. President Trump must be urged to recognize the agreement's importance to our state, because the alternative would be deterimental to the Texas and American economy. (Lars Hagberg / AFP/ Getty Images)LARS HAGBERG/Contributor

Combine simplistic political promises with complex international economics and all you get are unintended consequences.

President Donald Trump imposed tariffs Tuesday on foreign-made washing machines and solar panels, raising prices on those goods by 30 percent, helping two foreign-owned companies and taking away jobs from thousands of Americans.

The president fired the first salvo in his long-promised global trade war, but as in any battle, the costs will likely outweigh the benefits.

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Trump's order imposed a 20 percent tariff on the first 1.2 million residential washing machines imported annually, and a 50 percent tariff on any imported after that. More distressing, he levied a 50 percent tariff on washer parts.

Whirlpool, which filed the complaint with the International Trade Commission, said it would hire 200 workers to boost domestic manufacturing. The move, though, will likely cost more American jobs.

Before the tariffs, Samsung Electronics Co. had hired more than 600 workers at a South Carolina washer factory and planned to hire more. LG Electronics is building a washer factory in Tennessee and planned to hire hundreds more.

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Both of those companies must now pay a 50 percent tariff on parts for their factories, and of course pass those higher costs on to consumers. Higher costs will mean lower sales and therefore fewer employees, which is why South Carolina's Gov. Henry McMaster and other Republican leaders vehemently opposed the tariffs.

The tariffs will also allow domestic manufacturers to raise prices to match higher prices for imported washers, costing American consumers more in the months ahead than they would have paid last year.

The solar panel tariffs are equally absurd because the two American manufacturers that filed the complaint are owned by German and Chinese companies.

The first 2.5 gigawatts of solar panels imported a year are exempt, but after that Trump levied a 30 percent tariff, which will step down 5 percent a year to 15 percent in 2021. The stated purpose is to allow Chinese-owned Suniva and German-owned SolarWorld Americas to get out of bankruptcy and figure out how to compete.

The first problem is that neither company manufactures the type of solar panel imported from China and used in most residential and utility-scale projects. Neither company truly offers a replacement product, so that leaves solar power companies to continue buying from the same suppliers, only paying more.

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ClearView Energy Partners, a clean tech consulting firm, said the tariffs could increase residential rooftop system costs by 4 percent and utility-scale systems by 10 percent. That price hike will likely delay or cancel 10 percent to 15 percent of new U.S. solar installations over the next five years, Wood Mackenzie researched M.J. Shiao told the Reuters News Agency.

That slowdown in solar energy development will cost 23,000 American jobs, according to the Solar Energy Industries Association. Suniva and SolarWorld employ only a few hundred people each.

"We are disappointed by the administration's decision on the trade case," said John Berger, CEO of Houston-based Sunnova, which specializes in residential solar installations. "Residential solar costs have come down significantly across the industry over the last five years, and we expect those cost declines to continue, despite tariffs."

Washing machines and solar panels demonstrate Trump's challenge in implementing his "America First" trade policy and how it can backfire.

Talks on renegotiating the North American Free Trade Agreement reopened Tuesday in Montreal, with U.S. Trade Representative Robert Lighthizer demanding concessions from Canada and Mexico. Republican leaders in Congress are worried he will do more harm than good.

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Iowa Sen. Joni Ernst, a conservative Republican, has pleaded with Trump not to ruin NAFTA for the thousands of farmers who rely on food exports to make a living. Texas Sen. John Cornyn has expressed his concern that blowing up NAFTA will hurt our economy, which has a trade surplus with Mexico.

America First sounds like a great idea, until you look at how integrated the global economy has become. International trade and investment have created more American jobs than it has cost, and blowing up the current trading regime will do more harm than good.

That's certainly the message that world leaders will have for Trump when he arrives Davos, Switzerland, later this week for the World Economic Forum.

We can only hope our president recognizes the benefits of the economic system that has made America the most powerful nation in the world, and he will pander less to a nationalist strategy that will only impoverish us.

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