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US Puts Tariff On Chinese Solar Panels 311

Posted by timothy
from the why-not-just-sink-5%-of-the-ships? dept.
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."
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US Puts Tariff On Chinese Solar Panels

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  • well... (Score:4, Interesting)

    by pele (151312) on Saturday March 24, 2012 @09:30AM (#39460457) Homepage

    A (rare) moment of US/EU strategic and economic briliance?

    • A (rare) moment of US/EU strategic and economic briliance?

      I'm not sure if it's brilliance, or just the opening salvo of another Smoot-Hawley [wikipedia.org], leading to a bad feedback loop. I don't know. Given the current economic situation in the US, I think it merits continued observation.

      • Re:well... (Score:5, Insightful)

        by _Sharp'r_ (649297) <sharper@@@booksunderreview...com> on Saturday March 24, 2012 @09:51AM (#39460571) Homepage Journal

        One government intervention in the market usually fails, which then leads to another intervention, which then fails, which then leads to another intervention... and so on. Wouldn't it be nice to have one of these laws/regulations come with a measurable goal and be automatically repealed if it didn't meet it?

        Speaking of wishful thinking...
        We have subsidies to buyers, then subsidies to suppliers, then loan guarantees to risky manufacturers, then tariffs on imports... what's next, skip it all with an individual mandate that all Americans purchase solar panels for their home, but only from certified U.S. union-run companies?

        It would be cheaper and less economically destructive if the government just gave a few billion directly to the bank accounts of their special interest buddies instead of distorting the Catallaxy [wikipedia.org] with this farce.

        • Re:well... (Score:4, Insightful)

          by cpu6502 (1960974) on Saturday March 24, 2012 @10:08AM (#39460643)

          If the Congress can mandate you MUST buy a product (insurance), then they also have the power to mandate you buy other products. Like the solar panels you describe.

          Or hybrid cars.
          Or LED bulbs.
          Or thermostats controllable by your electric monopoly.
          Or PCs that enable at-home voting (note: the application only works on Windows 7/8. Sorry.).
          Or ......

          • by fearlezz (594718)

            Or thermostats controllable by your electric monopoly.

            In fact, that was proposed in the netherlands. The proposed bill suggested that refusing to have a "smart" meter installed could get you 6 months of prison AND a fine of up to € 17.000 (± $22.500). Luckily this bill didn't pass.

    • Re:well... (Score:5, Insightful)

      by funwithBSD (245349) on Saturday March 24, 2012 @09:48AM (#39460557)

      If by "rare" your mean "not well done", then yes, I agree.

    • Re:well... (Score:4, Insightful)

      by couchslug (175151) on Saturday March 24, 2012 @10:53AM (#39460833)

      "Brilliance" would be INTELLIGENT government support for our domestic industries, but our government and people are incompetent to do that, so "tariffs" it is.

  • by Arancaytar (966377) <arancaytar.ilyaran@gmail.com> on Saturday March 24, 2012 @09:34AM (#39460479) Homepage

    The US gives money to people who buy solar panels, while adding an import tariff on the same solar panels that will be tacked on to the end user price. What was the point of the exercise?

    • by Trepidity (597)

      Also, the government does not tax oil imports, so the tax differential appears to reflect an implicit government preference that we use import oil rather than solar panels, in cases where they can be interchanged.

    • by kanto (1851816) on Saturday March 24, 2012 @09:44AM (#39460533)

      The US gives money to people who buy solar panels, while adding an import tariff on the same solar panels that will be tacked on to the end user price. What was the point of the exercise?

      These are inherently different things; the subsidies to buy solar panels only affects demand, but subsidising production creates an uneven playing field for those selling solar panels. There is also less incentive to create better and more affordable products if someone is just throwing money at you to keep production running. Everyone here of course understands this, but I'm guessing it's republican day at slantdot.

      • by cpu6502 (1960974)

        And what's wrong with China subsidizing panels? WE subsidize our products (hybrid cars, corn, sugar, banks, mortgage companies, solar companies like Solyndra, etc) . So it's wrong when China does it, but okay when the EU/US do it? Hypocrites.

        • by Herkum01 (592704)

          Just because the Chinese government subsidizes their "solar panels" does not mean that the US has to as well(AKA no tarriffs).

        • by goombah99 (560566) on Saturday March 24, 2012 @10:13AM (#39460673)

          And what's wrong with China subsidizing panels? WE subsidize our products (hybrid cars, corn, sugar, banks, mortgage companies, solar companies like Solyndra, etc) . So it's wrong when China does it, but okay when the EU/US do it? Hypocrites.

          Nothing is WRONG with a govt subsidizing an industry per se. But the appropriate response is to apply tarrifs.

          If you subsidize an industry this may make sense inside the country where the subsidies reside. There it is a level playing field because all companies have access. It may be good for the country because they want to build up that industry and overcome an economic hump, meet a national strategy like oil security, create employment, or just to satisty internal political harmony.

            But when you sell the products internationally it hurts companies outside. The remedy is tarrifs.

          Other countries should fee free to (and do) apply tarrifs to goods from outside that harm domestic industry.

          There's no Hypocrisy at all. It's exactly the right thing to do. However 5% is too low.

          The only reason this does not happen more is that tarrifs can launch a cycle of retribution when thought punitive. It's easier to let it slide usually. The places you care about dumping are in rapidly growing industries. There the early mover advantage can be too big to ignore.

    • by mosb1000 (710161)

      I suspect that was a rhetorical question. But for anyone who may be wondering, this is part of a complicated shell game our government plays with money in order to distract our attention away from what it is really doing.

    • by cpu6502 (1960974)

      The government does this crap all the time. They hand-out Social security checks, and then they tax them. So they hand-out money and then they take it back, thus creating bureaucratic waste (and white collar welfare for workers reviewing Retired folks tax returns). It would be more logical for the government to just not tax the SS checks and eliminate that waste.

    • by tukang (1209392)
      You're completely off. The point is to protect domestic makers of solar panels. China is subsidizing its solar panel makers so much that they're able to sell solar panels at prices significantly below what it costs to make them! How can any non-subsidized competitor compete in this environment? They can't. And once the competitors go out of business, I suspect those subsidies will decrease or go away and lack of competition ultimately leads to higher prices and lower quality products thus also screwing cust
    • by goombah99 (560566) on Saturday March 24, 2012 @10:04AM (#39460629)

      The US gives money to people who buy solar panels, while adding an import tariff on the same solar panels that will be tacked on to the end user price. What was the point of the exercise?

      The point is plainly obvious: Equalize the manufacturing playfield. Solar panel production is not a static industry. It is a growth industry.

      Subsidizing production in one nation hurts development of the industry in another. In contract, subsidizing use in one country helps production in all countries.

      However if you subsize production in one, then a use subsidiy amplifies the problem.

      The US just fixed that.

    • To trumpet the merits of free trade to the rest of the world, of course.

  • China has cheap workforce and huge rare earth production, they will make the panels regardless of subsidies or tariffs.

  • Begun the Solar War has.

  • Well (Score:3, Interesting)

    by koan (80826) on Saturday March 24, 2012 @09:46AM (#39460545)

    That petition alleges that the Chinese government unfairly subsidizes crystalline silicon photovoltaic solar cells and modules by providing cash grants, tax rebates, cheap loans, and other benefits designed to artificially suppress Chinese export prices and drive U.S. competitors out of the market.

    http://thinkprogress.org/romm/2012/03/15/445193/us-decision-chinese-solar-panel-imports-tariffs-partial-solution/?mobile=nc [thinkprogress.org]

    Why was the San Francisco-Oakland Bay Bridge built in China?
    https://www.nytimes.com/2011/06/26/business/global/26bridge.html?_r=1&pagewanted=all [nytimes.com]

    Why is American infrastructure in general being built by Chinese?
    http://americanmanufacturing.org/blog/why-are-chinese-firms-building-americas-bridges-and-roads [americanma...turing.org]

    Why are these jobs subsidizing China?

    Because we can't find welders,

    Watch the video.
    http://americanmanufacturing.org/blog/why-are-chinese-firms-building-americas-bridges-and-roads [americanma...turing.org]

  • We subsidize corn production and then sell it round the world. But it's okay when we do it; not okay when China does it (with solar). Double standard.

  • A very common practice. Here's a link to the last accusation of steel dumping:
    http://www.time.com/time/world/article/0,8599,1893784,00.html [time.com]

  • The whole reason Solyndra went bankrupt was that their whole business model depended on a higher price for solar panels. They were totally caught off guard by the cheapness of Chinese panels. Yet another area of tension between the relatively privileged life we enjoy in the use and the rise of cheap yet adequately skilled label in East Asia.

    • However, if they had been better stewards of the money and not spent like drunken sailors on DotCom era perks, and maybe not built the plant in an area with high property costs and high labor... They would have able to compete with Chinese solar panels.

      • by amiga3D (567632)

        They could have built the plant in Mississippi and the labor costs would have been better with vastly lower real estate costs. I'd bet Mississippi would have given them land and all the tax incentives they'd ever want.

  • by Shoten (260439) on Saturday March 24, 2012 @09:51AM (#39460579)

    There's a larger game afoot here than just price. This is about what happens in the long-term when a country unfairly supports a domestic industry and artificially lowers the cost of that industry's products on the marketplace. What results from this is the failure of producers of that good in other countries, which in turn results in a monopoly, or at the very least, market share dominance. Then, the prices can go back up, leaving other countries with less competition and a strategic disadvantage. In this case, that disadvantage also includes an energy source, so there's a double-risk.

    And yes, I know...they can always just start up new companies, right? Wrong...it's not that easy. Because in the meanwhile, the surviving companies have been able to invest in R&D, and further lower costs, improve manufacturing processes, and innovate, all of which raise the barrier to entry in the market. And even if a company elsewhere comes onto the market and starts competing effectively...China would only have to start subsidizing their own industry again to put them at a disadvantage, and the cycle repeats itself.

    • Only a problem if you think patents are worth respecting.

      Another approach would be to buy the panels (and anything else produced at subsidised prices) and focus on other areas. Once they put the prices up, you steal their tech and make them yourselves.

      Of course if you have shut down your rare earth mining facility because your tiny capitalist minds said it was cheaper to get them from China, well I guess there is some benefits to a planned economy after all.

  • when youve spent (Score:2, Insightful)

    by nimbius (983462)
    thirty years pushing manufacturing and technology jobs overseas to china under the guise of economic sense and prosperity for america, you dont get to turn around and cry foul when you get exactly what you asked for. namely, cheap foreign slave labor subsidized by a dictatorial ruling class operating under the guise of a communism it hasnt practiced in almost 40 years.
    tarrifs are okay. you use them to incense corporations to reconsider employing local labour, but they wont work in americas revolving door
  • by ThorGod (456163) on Saturday March 24, 2012 @10:02AM (#39460623) Journal

    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.

  • Too late (Score:4, Insightful)

    by acoustix (123925) on Saturday March 24, 2012 @10:11AM (#39460665) Homepage

    They should've done this before Solyndra went bankrupt and took $500M of tax payer money with them.

  • by Anonymous Coward on Saturday March 24, 2012 @10:21AM (#39460711)

    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.

  • but since the market isn't rational, it makes perfect sense. We're not dealing with rational abstract entities operating in some clear frictionless metaphysical space. We are dealing with thugs and gangsters seeking advantage over each other. If something works for a short sighted but politically expedient goal, then it's golden, and classical economics can go fuck itself. And while that may seem harsh, it has actually always been true. When times are good, the man behind the curtain is invisible, but times
  • Too bad they did this after Solyndra was on the rocks, and then needed a bailout, and then failed anyways.

  • Rare Earths Battle (Score:4, Interesting)

    by fast turtle (1118037) on Saturday March 24, 2012 @10:50AM (#39460817) Journal

    This is the Opening Salvo by the U.S. against China in their Rare Earths Suit involving the WTO. China has restricted exports of rare earths to the U.S. Japan and Europe that is impacting the ability of our industry to produce, EV's, Wind Generators and many other products that depend upon them. There is also the issue of the strategic metals part of those rare earths and explains part of the reasoning behind the reopening of the Mesa California Rare Earth mine.

    Others have pointed out that this is also due to China Dumping cheap solar panels on the market with the express purpose of killing our own industry. The only way I can see to level the playing field against China is to revoke their most favored trading partner status that Bush Jr. Gave them. This will simulateously send the Chinese government a signal that America is no longer going to be their bitch and increase the cost of Chinese goods in the States while encouraging those American Businesses that still exist to increase their marketing. Of course, without nailing some CEO's to the wall and hitting their wallets for the destruction of companies (violating their fiduciary responsibilities) the cost of goods from China wont materialy increase. A side note here

    Walmart accounts for 10+ percent of all goods imported from China in the United States - That's All Chinese Goods

    Recently, ABC World News Tonight with Diane Sawyer ran a series on Made In America that showed many U.S. Companies selling products for the same price as Chinese manufactered junk with higher quality. So why in hell do you want to buy Chinese crap and send our work to them?

  • 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.

    This is muddled logic. There's no reason for subsidized demand to lead to subsidized production if demand is subsidized to the point where producers can make a profit. Well, no reason other than to make sure jobs get created in your country instead of somewhere else.

  • by Rix (54095)

    Subsidizing demand anywhere does not favour any manufacturer. Subsidizing suppliers in China disadvantages suppliers anywhere else, perhaps to the point of driving them out of business and leaving the Chinese infrastructure in place who can then charge whatever they want.

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