I’m clearly and obviously a little out of date here but I really was under the impression that the purpose of the American government was to do good and nice things for the American people. You know, there’s some things that must be done, some things that require compulsion to do them and thus we have to have a government to do those things that both need compulsion and also must be done. But it would appear that what the American government thinks it ought to be doing is making its own citizens poorer. For that is what it is doing with this most puzzling announcement of tariffs on various solar power equipment from China and Taiwan:
The decision, intended to close a loophole that had allowed Chinese manufacturers to avoid tariffs imposed in an earlier ruling by using cells — a major module component — made in Taiwan, found that the companies were selling products below the cost of manufacture and that the Chinese companies were benefiting from unfair subsidies from their government.
The department announced anti-dumping duties of 26.71 percent to 78.42 percent on imports of most solar panels made in China, and rates of 11.45 percent to 27.55 percent on imports of solar cells made in Taiwan. In addition, the department announced anti-subsidy duties of 27.64 percent to 49.79 percent for Chinese modules.
Let’s assume that the government is in fact correct here and China really has been subsidising these panels and modules. So, what is the correct response here? Well, I know what I do when someone offers me free money. I say thank you and depending upon how stupid I think they might be I might add “Please, may I have some more?” I most certainly don’t go around shouting that this free money must be taxed so that I gain no benefit from the offer, that’s for sure.
And the thing is, if a foreign government really is subsidising the production of things being bought by Americans it really is the same things as that government shipping free money to American citizens. Let’s say someone wants to purchase $10,000 worth of those Chinese modules that are now attracting that near 50% tariff. Given that these tariffs are supposedly set at the rate of the subsidy being given here’s what the American government is really doing.”Well, Jim Bob, you know that solar stuff you bought for $10k? Well, some foreigner wanted to send you a check for $5k. But don’t worry, we stopped him good and proper.”
Sure, there’s some people who will benefit from this: the American manufacturers of solar panels and modules that aren’t getting those Chinese subsidies. But it’s also obvious that the benefit to them is going to be lower than the disbenefit to those who are no longer getting that free cash. Because that free cash really is money flowing in from outside the country into the pockets of Americans. Without the subsidy this doesn’t flow in.