On January 22, 2018, the Office of the United States Trade Representative (USTR) announced that President Trump had approved the imposition of safeguard remedies on imports of large residential washing machines and solar cells and modules. President Trump’s actions resulted from safeguard investigations by the independent, bipartisan International Trade Commission (ITC) under Section 201 of the Trade Act of 1974. In both investigations, the ITC determined that increased foreign imports were a substantial cause of serious injury to the domestic manufacturers of large residential washing machines and solar cells and modules, and recommended that the President take action to remedy the injury and facilitate industry adjustment to import competition. Following the ITC’s investigations, an interagency team led by USTR, which is known as the Trade Policy Staff Committee, recommended that President Trump take certain actions that are designed to provide relief to U.S. manufacturers.
For the investigation on imports of large residential washers, President Trump approved a safeguard tariff-rate quota, which allows a limited volume of imports at one tariff rate, then applies a higher tariff rate on all subsequent imports. President Trump also approved a safeguard tariff on certain parts for large residential washers, under which a set volume of covered parts may be imported before a 50% tariff is imposed . As discussed in the scope of the ITC’s investigation, covered parts means “certain parts used in large residential washers, namely: (1) all cabinets, or portions thereof, designed for use in large residential washers; (2) all assembled tubs designed for use in large residential washers which incorporate, at a minimum: (a) a tub; and (b) a seal; (3) all assembled baskets designed for use in large residential washers which incorporate, at a minimum: (a) a side wrapper; (b) a base; and (c) a drive hub; and (4) any combination of the foregoing parts or subassemblies.”
The tariff-rate quota approved by President Trump will be applied for three years under the following terms:
For the investigation on imports of solar cells and modules, President Trump approved a safeguard tariff for the next four years. In Year 1, the tariff is set at 30 percent, then reducing to a 25 percent in Year 2, then 20 percent in Year 3, and, finally, 15 percent in Year 4. In each of the four years, however, the first 2.5 gigawatts of imported solar cells will be exempt from the safeguard tariff. (A gigawatt is a unit of electric power equal to 1 billion watts).
Reaction to these tariff announcements has been swift. South Korea stated its intent to file a complaint to the World Trade Organization (WTO) on the safeguard measures regarding washers. China and the EU also characterized the safeguard measures as violations of WTO rules, with both promising to act if the measures harmed their exports. In addition to opposition at the WTO, Mexico also reserved the right to pursue legal remedies under the North American Free Trade Agreement for any harm to its exports.
The safeguard measures will, however, likely serve as a prelude to additional international trade-related actions to be taken by President Trump in the weeks and months ahead. In the last few weeks, for example, the Department of Commerce (Commerce) delivered its reports to the President in the Section 232 investigations on effects of imports of steel and aluminum on the national security of the United States. The steel report was delivered on January 11, and the aluminum report delivered on January 19, 2018. While the President has 90 days to decide whether or not to take action based upon the reports provided by Commerce, it is possible that President Trump’s decision will be announced more quickly.
