As of Thursday, the Commerce Department intends to impose a minimum 30% tariff on solar panels from China. The tariff is an attempt to prevent China from gaining a monopoly over solar panel production, but in my opinion it is a wasted effort. The US government is fighting an uphill battle trying to protect the manufacturing industry given the cheapness of production overseas and the effectiveness of China's very industry-specific Five-Year Plans (the latest of which has a big focus on solar energy.) The tax may hurt China but it also damages US economic interests because raising the price of solar panels will lead to less business for solar panel installers (a service job which is more stable than manufacturing since it can never be outsourced overseas) and for raw material suppliers (American chemical companies supply most of the main ingredient in solar panels to China.) It seems that the government is choosing to weaken non-outsource-able industries in favor attempting to preserve a proportionately shrinking one. It seems to me that any gains that could be made from this tariff would be small and not worth driving up the price of being green.
http://www.nytimes.com/interactive/2012/01/20/business/the-iphone-economy.html
Perhaps I am missing some large argument in support of the tariff or perhaps the manufacturing sector is far more important than I realize. What do you guys think?
3 comments:
I agree with the opinion of this post – the basis of this tariff breaches the widely preached American concept of free trade, and although understandable in its intent to prevent the Chinese from monopolizing the solar panel industry, the tariff has the potential to be ultimately ineffective. As history has shown, imposing high tariffs (and to a more extreme extent, blockading imports – as demonstrated in the 19th century with France, the United States, and Great Britain during the Napoleonic Wars) rarely breeds the desired result. As you said, imposing such high tariffs will burden our own economic interests and potential profit from the solar panel industry. The Chinese, on the hand, can turn to multiple other ways of expanding their solar panel industry – with or without the help of a relationship with the US.
I see this as more evidence that the government is dumb, frankly. They might know something I don't, but to someone like me this is seems like an oversimplified solution to the weak solar panel industry here. I think it's more or less inevitable that manufacturing in most areas will be sent overseas to places like China. By putting tariffs on Chinese solar panels, the government is putting up an ultimately useless struggle that only hurts other US industries, industries that havea much better chance of staying in the US in the long run.
I support this argument against these tarrifs on chinese solar panels and propose that the purpose of setting them in the first place is as a reponse to the massive outbreak or massive magnification of the process of outsourcing's effects on local employment. We all know that outsourcing itself isn't a new business technique and in the light of the tarrif on chinese solar panels shows that the negative response of outsourcing may be a form of boycott to encourage the businesses to employ locally located workers.
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