[author: Laura Anne Schierhoff]
On January 22, 2018, President Trump announced new tariffs on imports of solar panels and washing machines. The companies that will be most affected are from just two countries – China and South Korea. Trump has often complained that China and South Korea have unfair trade advantages over the U.S. There are fears of a possible backlash against the new tariffs, as China and South Korea import American-made machinery and agricultural products, and could punish the U.S. by opting to buy from non-American international competitors. There is also a concern that these tariffs will affect U.S. solar energy jobs and increase customer costs.
China may be cautious in applying their own tariffs on U.S. goods, as they export about four times more to the U.S. than the U.S. exports to China. This may just be the beginning as President Trump has stated he would like to issue further tariffs on aluminum and steel imports from China, as well as to address further trade action focusing on intellectual property. South Korea said it will file a complaint with the World Trade Organization (WTO). However, there is uncertainty whether the Trump Administration would accept a decision by the WTO, as the U.S. Trade Representative, Robert Lightizer, has previously questioned whether WTO decisions should be binding on the U.S. The new tariffs may also affect current talks with South Korea, as the U.S. is currently renegotiating a free trade agreement with them.
The day after Trump’s decision on new tariffs, a group of 11 countries – including Canada and Mexico – announced they have a deal for a revived Trans-Pacific Partnership (TPP), the trade agreement Trump pulled the U.S. out of as one of his first actions as President. The new deal is called the CPTPP, which stands for the Comprehensive and Progressive Trans-Pacific Partnership. Under the CPTPP, companies will have access to 500 million people with an estimated combined GDP of $10 trillion. The countries hope to sign the agreement by the end of the year. The tariff announcement also came a day before the start of the sixth round of North American Free Trade Agreement (NAFTA) talks.
