Abusing trade remedies part of Trump’s agenda

The decision by US President Donald Trump on Monday to impose tariffs on imported solar energy components and large washing machines, signals Washington is quickening its pace to embrace anti-trade populism under the pretext of pursuing “fair trade”.

While the tariffs will do little to help US manufacturers or create jobs in these sectors, China as the world’s largest manufacturer of solar panels and washing machines will obviously bear the brunt of the protectionist measures, suggesting they are the latest salvo in the Trump administration’s broader trade strategy against the world’s second-largest economy.

The decision comes hard on the heels of Washington derailing two deals involving Chinese companies — the planned partnership that would have seen AT&T sell Huawei’s smartphones in the US market and the blocking of Alibaba’s proposed acquisition of the money transfer service MoneyGram — both ostensibly on national security concerns.

China’s Ministry of Commerce has responded to the latest move by calling it an abuse of trade remedies, saying that by using a domestic law rather than the World Trade Organization dispute settlement procedures, the United States is undermining a cornerstone of the international trade order.

It is not hard to predict that more US manufacturing sectors will be encouraged by the move to seek similar restrictive measures in an effort to win their survival battle, which portends more trade frictions.

However, protectionism will not revive the fortunes of struggling US companies or create jobs. Such corporate welfare merely puts these companies on temporary life support.

That is why the vast majority of the US solar industry opposed the tariffs, saying in effect they are a cheap shot to appease Trump’s populist support that will backfire and harm the broader solar industry in the US.

And while Trump might be dismissive of the effects of a trade war with China, others in the US are less sanguine about the prospect, fearing it will damage its economy and put a brake on the nascent global economic recovery.

Certainly, such protectionist measures are likely to provoke retaliatory measures, while doing nothing to address the economic forces that have battered US manufacturers and impelled manufacturing out of the country.

Trump has promised to make America great again. But he stands a slim chance of achieving the goal if he insists on bucking the trend of globalization and free trade by pursing US interests at the expense of other nations.

The US president is due to speak on the last day of the World Economic Forum in Davos on Friday, which is likely to highlight just how out of step with other countries the US is, and to what extent it intends to pursue its populist agenda.