Trump Should Reject The Protectionist Attack On Solar Energy | Stock News & Stock Market Analysis

Right before the election last year, I did something stupid with my money.

Assuming Hillary Clinton would win, I invested in an inverse S&P fund. I was expecting that the market would contract the week after a Clinton victory and that I could make a few quick bucks.

Not my worst investment decision but certainly one of them … If I were feeling particularly nationalistic, I’d say I bet against America and I lost.

X The last year has been the mother of all stock market rallies. Last week, the headline was that the stock market had “set a record for setting records.” In 2017, the Dow has had 70 trading days that ended on record closes, while the NASDAQ had 72. The S&P has had only 62 record closings (not quite a record, but close). In the 12 months since Trump’s victory, the market created $5.4 trillion in new wealth.

Critics in the media are quick to point out the tiny dark cloud in a heaven full of silver linings — that not everyone is benefiting from this boom. But even then, the numbers are hard to argue with: unemployment is at a 17-year low and new home sales are at a 25-year high. Even CNBC was forced to admit that Trump can at least take some credit for the boom — and that was back in August!

(And don’t worry about me — I sold my inverse fund a long time ago. I took a loss, but only a small one compared to what it would have been if I’d held on all year.)

The economy has responded positively to the administration’s push for deregulation and, with the passage of the tax bill, all signs indicate that this growth will continue. Hanging over all this economic success is one particular danger though: protectionism.

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Despite all of his protectionist campaign rhetoric, the Trump administration has avoided policies that would hurt international trade, a critical part of economic well-being in our hyper-connected, globalized world. He ignored Whirlpool’s demand to punish South Korea for Samsung’s crime of making better washing machines. Just last week, he rejected the Big Three airlines’ plea to cancel our open skies agreement with Qatar and the UAE.

Let’s hope Trump sticks with it and rejects an absurd demand for tariffs on solar energy imports.

Two struggling solar companies, Suniva and Solar World, have petitioned the U.S. International Trade Commission to impose prohibitive tariffs on imported solar components, in addition to a floor price on foreign solar cells and module imports, which would essentially double their prices.

This kind of mercantilist mentality has no place in the 21st Century.

The two companies used a seldom-used petition called a “section 201,” which only has to show that imports are hurting the domestic industry — unlike dumping cases where something illegal is in play. (The ITC hadn’t accepted a 201 since 2002, a tariff on steel imports, and that was rejected 18 months later.)

The ITC didn’t accept the fullness of their demands, but did recommend the administration impose a variety of quotas and tariffs as a remedy. Opinion was divided: the pro-tariff crowd called the ITC’s recommendations “weak,” while opponents called it “intensely harmful.”

The opposition to solar tariffs is an interesting coalition of leftist environmentalists and right-wing free traders — the Energy Trade Action Coalition (ETAC). Trump supporter and conservative firebrand Sean Hannity has bashed Suniva and SolarWorld for seeking a “bailout.”

Meanwhile, Greentech Media insists that, under tariffs, “vibrant residential solar sectors could disappear almost entirely,” according to an analysis they did in October.

I don’t need to explain the obvious environmental advantages of solar power, but the economic reality is that it has razor-thin margins and couldn’t absorb prohibitive tariffs. Any disruption to the industry could threaten U.S. energy independence, our leadership in this new developing field, and the livelihood of the country’s 260,000 solar-industry workers.

Suniva and SolarWorld aren’t even domestic companies: the former is co-owned by a Chinese parent company and the latter by an insolvent German company. International ownership is fine — it’s economic reality in our hyper-connected, globalized world — but it’s really weird for foreign corporations to beg the U.S. government for protectionist intervention. No one should, but they shouldn’t just for their own sake. Protectionist furor might come back to bite them.

Trump has complete flexibility on how to respond. He can reject any kind of trade penalties on these solar components (which would be best), accept the ITC’s recommendations (which would be bad), or go with Suniva and SolarWorld’s initial demands (which would be terrible).

Despite intense opposition, unending criticism, and even a few lost elections, Trump has presided over a thrilling year of economic success. Staying out of the energy sector’s way would help this boom continue (and be great for the environment). Free trade is one of the greatest American inventions. So please, Mister President. Don’t make the same mistake I did.

Don’t bet against America.

  • Whitley is a Washington-based writer.

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Originally posted 2017-12-30 15:13:59.


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