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China, South Korea protest 'America First' tariffs

January 23, 2018

China and South Korea have accused the US of abusing global trade rules after Donald Trump approved import tariffs on solar panels and washing machines. The move marks the latest salvo of Trump's "America First" agenda.

Solar industry in China
Image: picture alliance/Zumapress

China and South Korea on Tuesday denounced steep US tariffs on solar-energy cells and washing machines. After President Donald Trump approved the new measures, the Asian giants threatened to raise their case before the World Trade Organization (WTO).

Beijing's commerce ministry said in a statement that "together with other WTO members, China will resolutely defend its legitimate interests."

Read more: Only threats in Trump's China policy?

Trump and the WTO: A turning point for trade?

The ministry added that the US tariffs "not only aroused the concern of many trading partners, but were also strongly opposed by many local governments and downstream enterprises in the US." It did not indicate any intention to impose countermeasures.

China is the US' biggest trading partner and the world's largest producer of solar panels.

global solar power generation graph

Meanwhile, South Korea, which signed a free-trade pact with President George W Bush, did not mince words over its intentions. Trade Minister Kim Hyun-chong described the tariffs as "excessive" and said they may constitute a "violation of WTO provisions."

"The United States has opted for measures that put political considerations ahead of international standards," Kim added. "The government will actively respond to the spread of protectionist measures to defend national interests."

Many South Korean electronic manufacturers are set to suffer from the US' protectionist measures, including Samsung and LG Electronics, who together sell up to 3 million washing machines annually in the US.

Samsung, South Korea's most valuable company, said the tariffs were "a tax on every consumer who wants to buy a washing machine."

Shares in LG plunged by 5 percent when trading opened in Seoul on Tuesday, but recovered to just 1.8 percent lower than at Monday's close. Samsung shares were up by 0.83 percent, in line with South Korea market's gain of 0.9 percent.

Mexico, another major manufacturer of washing machines and solar cells, said it was "regrettable" that it wasn't excluded from the measures. 

Companies concerned over protectionism

What are the terms of the tariffs?

Known as the "Section 201" safeguards, the US will impose a 20 percent tariff on the first 1.2 million imported large home washers during the first year, and a 50 percent tariff on any machines above that number. Those tariffs are set to decline to 16 percent and 40 percent respectively in the third year.

Imported solar cells will be slapped with a 30 percent tariff in the first year, declining to 15 percent by the fourth. However, 2.5 gigawatts of unassembled solar cells will be allowed to be imported tariff-free each year.

Read more: US broadside leaves WTO meeting in tatters

Why have they been imposed?

US President Donald Trump agreed to the proposed tariffs after a US International Trade Commission (ITC) investigation found that imported products were "a substantial cause of serious injury to domestic manufacturers." However, the president ignored the ITC's suggestion to exclude South Korea from the measures.

The measures represent part of Trump's "America First" drive that aims to favor US manufacturers over foreign companies.

"The president's action makes clear again that the Trump administration will always defend American workers, farmers, ranchers, and businesses in this regard," U.S. Trade Representative Robert Lighthizer said in a statement announcing the decision.

China trade surplus with US hits record high

dm/rt (AP, AFP, Reuters, dpa)