By Bill Wilson — Can you say Smoot-Hawley?
Not content with Ben Bernanke’s currency war — which attempts to cheapen prices for U.S. exports overseas by devaluing the dollar — the Obama Administration has decided to go for the real thing, slapping new tariffs on Chinese solar imports.
As reported by Reuters, the U.S. Commerce Department accused China of “‘dumping’ solar cells and panels in the United States at prices 18.32 percent to 249.96 percent below fair value” and is setting “additional countervailing duties ranging from 14.78 to 15.97 percent to combat Chinese government subsidies, significantly higher than preliminary levels.”
The U.S. has already slapped duties on Chinese-made wind turbine towers, too, reflecting White House unease with the costs of making “green” energy here in the U.S. — Chinese companies are producing the same solar panels and wind turbines for pennies on the dollar compared to their U.S. counterparts.
But the new policy still will not create “green” jobs in the U.S.
Manufacturing in emerging economies in recent decades has simply been more cost-effective, and with jobs shifting overseas. In 1979, 19.5 million Americans worked in manufacturing. Today, it’s just 11 million.
That trend will only be addressed by addressing the high cost of doing business in the U.S. — through lower taxation and a strong dollar — not by sparking a trade war.
All the Administration is accomplishing is to force American companies and consumers to pay extra for foreign solar and wind technologies, and in turn to pay more for overpriced U.S.-made goods. All parties will be hurt in the process.
Meanwhile, Obama’s apparent strategy for converting the U.S. to a “green” economy is to make alternative solar and wind energy more expensive. On its own, the move might actually have made conventional options for electricity such as coal more attractive.
But Obama is trying to drive up prices there too.
According to Department of Energy’s estimates, by 2017 the cost of coal per megawatt hour will triple from about $35 to anywhere from $97 to $139. This comes on the heels of Obama policies to require existing and new coal-burning power plants to use pricey “green” technologies that will cost consumers billions of dollars extra every year.
So, the only way the Department of Energy’s 2017 projection can show alternatives like wind and solar to be viable is to triple the cost of coal. No word yet from the Department on how Obama’s “green” trade war with China will impact wind and solar prices.
Meanwhile, although Federal Reserve quantitative easing programs have seemingly boosted U.S. exports, this has been more than offset by higher oil prices paid to energy exporters. The trade deficit has actually increased as Americans pay more at the pump.
If we’re in a trade war, we’re apparently losing.
In the Great Depression, the Smoot-Hawley Tariff Act was enacted to make imported goods imported more expensive. The thought was to incentivize the purchase of U.S.-made goods during a devastating economic downturn.
It only made things worse. U.S. exports took a big hit immediately as the world retaliated, dropping from $3.84 billion in 1930 to $2.08 billion in 1931, and bottoming out in 1932 and 1933 at $1.61 billion and $1.67 billion.
Now Obama is attempting to do the same thing again. For someone who has repeatedly reminded us that we are in the worst economy since the Great Depression, it seems Obama and his Administration have not learned a thing from the Depression’s history.
Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.