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US Puts Tariff On Chinese Solar Panels
retroworks writes "Two stories in Digitimes make a puzzle of economic policy. U.S. and European tax incentives and stimulus increase steady demand for solar panels. The Chinese government subsidizes production of solar panels to meet this growing demand. The U.S. and EU complain, and place tariffs on Chinese solar panels. Do allegations that China has used government funding to subsidize the production trump our desire for cheaper solar power? Subsidizing demand led to subsidized production. In other words, one market interference (subsidized demand for solar) leads to its counterpoint, government tariff and taxation of the same product."
I'm all for placing tariffs on all Chinese imports. Yes, that raises prices on our end with respect to imports from China. China has a history of dumping (look up the term). The US needs to place tariffs on Chinese products to reduce the impact of its dumping procedures.
Tariffs on solar panels from China are not inconsistent with subsidies on solar panels. Why? Because while subsidies (artificially) increase demand in a good; tariffs (artificially) decrease demand in a good. The combined affect gently nudges people to purchase solar panels not produced in China.
And that, my friends, is how tariffs and subsidies can apply to the same market.
PS: I don't reply to ACs.
The subsidizes are to promote solar panels usage (generally a good thing) while the tariff is to counteract China's subsidies (dumping). Note, this is purely for China and not for solar panels made in other countries, especially those made locally. Letting China have such a large advantage due to China's subsidies would only hurt the US in the long term (see situation with rare earth metal as an reference). If you are complaining about the free market, well it's not already free due to China's subsidies and this would only level the playing field.
Because that's exactly what they did with the mining industry and rare earths? The US was, at one point, the largest supplier in the world of rare earths. You didn't dig them all up, they're still there in the ground, though today there's almost no rare earth production in the US.
What happened? China flooded the market with low cost minerals whose production was effectively subsidized by the significantly less stringent environmental controls, and US-based business couldn't keep up. And of course now that there's no rare earth production outside of China, they've started hoarding it and are interfering with and manipulating the world market.
In other words... China may be taking a loss right now, but will they still be 5 years from now?