Targets of Trump Tariffs Say U.S. Consumers Will Get Pinched

Asian nations have been bracing for trade sanctions ever since President Donald Trump took office a year ago.

The wait was over Monday, as Mr. Trump declared tariffs on imports of Chinese solar panels and South Korean washing machines -- measures his administration said were needed to protect U.S. manufacturers from a flood of cheap imports.

South Korea's Trade Ministry called the tariffs unfair and argued they violated World Trade Organization requirements, while China's commerce ministry called the action an "abuse of trade remedies."

The U.S. action will also mean higher prices for American consumers, said Wang Bohua, secretary-general of China's photovoltaic industry association, which represents Chinese solar companies. "They need our products that are cheaper and better," he said.

What's more, any short-term benefits to the U.S. industry could be diminished by hurting their global competitiveness, claimed Trina Solar, a Chinese photovoltaic maker that exports its products to the U.S. market.

Whatever the merit of those protests, some observers expect them to grow more numerous in the year ahead as Mr. Trump makes good on his campaign promise to protect U.S. manufacturers against what he has called unfair foreign competition.

The year "2018, I believe, will be a very consequential year in trade relations with China," said Nelson Cunningham, president of business consulting firm McLarty Associates, who was in Beijing this week for client meetings.

"It's only the first step," said Mr. Cunningham, a former adviser to President Bill Clinton on Western Hemisphere Affairs, said of the sanctions. "I think the administration will be initiating these cases themselves directly aimed at China."

Xu Sitao, chief economist for Deloitte China, agreed saying "this incident won't be a one-off."

"The Chinese business community and policy makers should be more worried, " Mr. Xu added, saying that China's usual response to trade disputes -- buying more goods from the U.S. -- may not work this time.

Andrew Tilton, Goldman Sachs chief Asia-Pacific economist, was less certain, saying it's still a question whether the Trump administration "may impose significant actions on a much broader scale."

U.S. businesses, by comparison, are likely to cheer Mr. Trump's initiative, said Lester Ross, an attorney at WilmerHale in Beijing and the Chair of the Policy Committee at the American Chamber of Commerce in China.

"On the whole, the U.S. business community is still very concerned about China's failure to establish a level playing field with respect to foreign business, including U.S. businesses," Mr. Ross said. "If these tariff measures had a broader impact on China, I think people would be very pleased. But I think there's got to be a lot of skepticism that these are appropriate ways to address the larger issues that affect the U.S. business community."

More measures may be coming. Last August, the Office of the U.S. Trade Representative, at the urging of President Trump, launched an investigation into whether the Chinese government unfairly pressures American companies operating in China to share their intellectual property and offer technology transfers.

That investigation is expected to be completed soon, and analysts said it could lead to potentially far broader U.S. sanctions against Chinese companies than those imposed Monday.

But protecting American manufacturing can be more complex than it appears. Suniva, a solar power company based in Georgia whose complaint spurred the U.S. government to take action, is majority owned by Shunfeng International Clean Energy Ltd., a Chinese solar manufacturer.

Write to Jon Emont at jonathan.emont@wsj.com and Yoko Kubota at yoko.kubota@wsj.com

(END) Dow Jones Newswires

January 23, 2018 08:14 ET (13:14 GMT)