“For the last six months, this same group of geniuses [Editor’s Note: Referring to his economic team] comes in here all the time and I tell them, ‘Tariffs. I want tariffs.'”
If accurate, Trump’s statement revealed an ever-intensifying war between the president’s economic advisors and other non-economic policy advisors. The economic advisors, many from the Wall Street firm Goldman Sachs, argue that tariffs are an ineffective mechanism for shaping international trade relations, preferring to let the market sort it out with its Invisible Hand, a belief in the power of the market which in many cases borders on fundamentalism.
On the other side, including former Trump Senior Advisor Steve Bannon, among others, are economic nationalists who believe in using tariffs and other mechanisms to protect domestic industries from what they view as unfair trade practices by global competitors like China and the European Union.
If those arguments sound familiar, that’s because they should be to anyone who has followed the Suniva/SolarWorld Section 201 trade dispute, currently before the U.S. International Trade Commission (USITC) for adjudication. The USITC plans to deliver its initial findings on Sept. 22 and will forward a final report to Trump on Nov. 13.
On Aug. 15, both opponents of and proponents for the trade petition made their case in testimony before the USITC. On the one side, Suniva/SolarWorld made the economic nationalist case, saying unfair global competition had hurt domestic solar module manufacturers and were proximate causes of Suniva’s bankruptcy and SolarWorld’s financial struggles. On the other side, the Solar Energy Industries Association (SEIA) and its allies argued the market, aided by bad business decisions by Suniva and SolarWorld, led to their bankruptcies – not global competition.
It should be noted that two studies by independent firms IHS Markit and Greentech Media have suggested the uncertainty caused by this trade petition could slash the U.S. PV market by between 60% and 70%. Suniva and SolarWorld dispute those reports and have offered their own report suggesting a decision in their favor could create nearly 115,000 new solar jobs.
That’s why the war inside the West Wing matters. Eventually, the Section 201 case will end up on Trump’s desk with the USITC recommendations (in a preliminary report, the USITC staff discussed the fact that 26 U.S. module manufacturers have gone bankrupt since 2012) about what he should do but, as pv magazine reported in July, Trump is under no legal obligation to follow the USITC’s recommendations, especially if the commission recommends against imposing the requested ““global safeguard relief” and Trump is still itching to impose tariffs on something.
If Axios’s reporting is accurate, Suniva and SolarWorld Americas’ leaders must be feeling much better about their chances of success this morning. Petition opponents, on the other hand, might be feeling a little queasy.
The only certainty, however, is that both sides have a stake in who wins this ongoing struggle between the market fundamentalists and economic nationalists in the White House – and that they will be watching it closely to search for clues as to how the trade petition will ultimately be decided.