International Trade: Tariffs on Imported Solar Panels and Washing Machines

Updated on April 11, 2018
Solar farm.
Solar farm. | Source

International trade has been a heavily discussed topic since the beginning of 2018. President Trump imposed tariffs on imported solar panels and washing machines. This leads Americans to think about America’s commitment to free trade and international trade going forward. There are some economists that suggest this action will have more negative impacts on the United States economy than positive ones. President Trump approves four years of tariffs starting at thirty percent which will gradually decline to fifteen percent in the fourth quarter. The main reason for the decision of raising the cost of importing solar panels from bigger manufacturers, who are mostly in Asia, is to raise the cost of cheap imports and level the playing field in the United States. This should encourage a boost in the United States manufacturing.

There are several potential issues with imposing tariffs on imported solar panels. There could be problems that will develop from this action in the beginning, but could potentially be effective long term. The reason why this will take longer than expected to show results is due to the United States manufacturers. In order for this to be effective, the United States manufacturers must be committed to expanding its domestic manufacturing. This could require adjustments to strategy within the industry and the United States manufacturers’ business model going forward. One short term issue that is statistically backed up is that the United States is not ready for this type of change. Eighty percent of United States solar installations use imported panels. The country that produces the most panels would be China. This statistic will impact a new strategy that United States manufacturers must implement to adjust to the imposed tariffs on solar panels. Specialization in a specific product can be an important business model for particular industries. If a country specializes in a product and then freely trades with other countries to complete other needs, this model could benefit both parties. Trying to enter a territory of the production of solar panels that the U.S. has been on the lower end of for years could be a challenge.

In the past, free trade has led to successful achievements such as increases in growth rates. Tariffs or trade restrictions of other kinds can interfere with the market. The stock market was impacted immediately. The industry expected higher tariffs; therefore the stock market impact was less than expected. This does not mean manufacturers are not facing higher costs though. Many U.S. manufacturers at first waiting were in anticipation for higher costs.

American workers will compete on a level playing field with their foreign counterparts. This can be a setback for the renewable energy industry in the United States. Solar installer has been one of the fastest growing job opportunities in the United States due to its effect on the economy. Advancing renewable energy can save Americans millions of dollars which is why many consumers keep a close eye on companies who deal with solar energy. This can also be geared toward a healthy environment. Solar Energy Industries Association projected 23,000 job losses this year between engineers and project managers. This sector employed 260,000 employees who are now at risk. Renewable energy is an area that the United States has been trying to improve. Improvement in this area takes time and innovative ideas. Companies in the renewable energy industry in the United States will have to adjust to these changes.

This action could hurt consumers in the first year because prices will drive up and consumers prefer low prices instead of high prices. The installers who want the lowest cost hardware will suffer as well. Other countries are affected by these tariffs too. South Korea and China believe this could damage the global trade environment. This action could encourage other nations to establish new trade barriers against U.S. products. This is just the beginning of international trade because there will be a focus on international trade throughout 2018. The United States could force companies to negotiate new deals. As long as, the U.S. manufacturers are committed to expanding its domestic manufacturing, the United States should benefit in the long run from imposing tariffs on solar panels and washing machines. President Trump’s campaign addressed the topic of China producing the most solar panels. In 2017, the White House focused on tax reform. In 2018, the White House is focused on international trade opportunities therefore imposing tariffs on solar panels and washing machines is just one of the many topics on international trade going forward.


Eckhouse, Brian, et al. “Trump's Tariffs on Solar Mark Biggest Blow to Renewables Yet.”Bloomberg.com, Bloomberg, 22 Jan. 2018,www.bloomberg.com/news/articles/2018-01-22/trump-taxes-solar-imports-in-biggest-blow-to-clean-energy-yet.

Mankiw, N. Gregory. “Why Economists Are Worried About International Trade.” The New York Times, The New York Times, 16 Feb. 2018,www.nytimes.com/2018/02/16/business/trump-economists-trade-tariffs.html?rref=collection%2Ftimestopic%2FInternational%2BTrade%2Band%2BWorld%2BMarket.

Reuters. “Trump Imposes Steep Tariffs on Imported Solar Panels and Washing Machines.” The Guardian, Guardian News and Media, 23 Jan. 2018, www.theguardian.com/environment/2018/jan/23/trump-imposes-steep-tariffs-on-imported-solar-panels-and-washing-machines

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