201 Down, 6 To Go as President Trump Takes His First 2018 Trade Actions — Panjiva
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201 Down, 6 To Go as President Trump Takes His First 2018 Trade Actions

Energy - Renewables 96 Industrials - Capital Goods 251 Tariffs 1139 U.S. 3227

The U.S. Trade Representative has announced decisions in both the section 201 reviews of washing machines and solar panels. The decisions come after a brief delay for further consultations after the initial ITC reports in November, as outlined in Panjiva research of November 29.

These are the first of seven substantive items that the administration of President Trump can take early this year to make good on earlier commitments to cut the trade deficit and boost employment, as outlined in our 2018 Outlook. The others include: the section 232 reviews of steel and aluminum; the section 301 review of China’s IP practices; completing the KORUS trade review; securing deeper import concessions from Japan; complete the defense procurement review; and implement more self-initiated trade cases.

The decision on washing machines applies 20% tariffs in year one on the first 1.2 million machines imported, and 50% on all imports thereafter, with sliding scales in the following two years. That’s inline with the harshest set of recommendations from the ITC. The tariffs will add $90 to the import price of residential washing machines, leading to higher consumer prices if companies choose not to absorb the cost in lower profits.

In the case of solar power equipments tariffs of 30% on all imports of cells (over 2.5 gigawatts) and modules in year, sliding thereafter, will be implemented. While that rate is lower than the 35% recommended by the harshest of three ITC recommendations, the coverage is broader – arguably making implementation and evasion prevention simpler. Notably there are no regional exceptions in either case.

While both cases will likely result in a marked cut in imports of the two product categories, suppliers in both instances have clearly raced to complete imports and build inventories ahead of their implementation. Panjiva data shows imports of seaborne imports solar cells and modules climbed 199% in the fourth quarter vs. the first and reached a new all-time record in October. Imports of washing machines meanwhile surged 194% and hit a record in December.

HISTORIC HIGHS FOR WASHER AND PANEL IMPORTS AS 201 DECISIONS LOOMED

Chart shows U.S. seaborne imports of washing machines (8450.20) and solar cells/modules (8541.40). Source: Panjiva

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