American solar panel manufacturers are complaining that cheap Chinese imports are hurting their business, so the Commerce Department is raising tariffs to make the Chinese panels more expensive. Reuters reports:
In the latest salvo in a series of ongoing trade disputes between Beijing and Washington, the U.S. Commerce Department said it sided with U.S.-based solar companies that had complained a wave of Chinese imports had wrongly undercut their pricing and forced several renewable players out of business.
With Thursday’s move, Washington set tariffs on shipments from most of the top Chinese exporters, including Suntech Power Holdings Co Ltd and Trina Solar Ltd, at about 31 percent.
So what’s an anti-dumping duty? What’s dumping? Basically, dumping occurs when a market is flooded with foreign goods sold at unfairly low prices, which injures domestic sellers in that market. Dumping can be undertaken by private companies or by states. Various international agreements allow states to respond to dumping by imposing measures to eliminate the advantage gained by the low prices, and in this case, the US is basically raising the cost of entry for these Chinese solar panels into the US marking, making those panels more expensive.
These sorts of trade restrictions can give a young domestic industry a chance to mature and grow strong. I think Japan limited (or banned) imports of foreign automobiles to give their auto industry a chance to grow, and I think that strategy worked. Typically though, trade barriers hurt the market imposing the barriers. Think of the Embargo Act of 1807 or the Smoot-Hawley Tariff of 1930, which is blamed for helping to pro-long the Great Depression.
Given that solar purchases are often subsidized by the government, it’s probably a good thing that China ultimately won’t be getting as much of those subsidies, but I don’t know how I feel about shielding producers from low-priced competition. Of course, I don’t like how China shields workers from decent wages.