UPDATE: Trade Wars and Tariffs

  • August 22, 2018

In recent weeks, trade policies, tariffs and retaliatory actions are in the news almost daily. Washington state’s economy is more focused on international trade than any other U.S. state – nearly 40 percent of jobs here are tied to trade. That has drawn the attention of local, national and international media seeking to understand what the Trump Administration’s policies and actions mean for American businesses and workers.

The latest round of developments includes tariffs of up to 40 percent imposed by Turkey on a number of U.S. products, including alcohol and liquor, plastics, paper and cars. These represent little direct impact to our state.

Far more concerning are actions taken last week by China with the World Trade Organization (WTO) launching a dispute settlement procedure over state-level renewable energy (solar in particular) incentive programs in several states, including Washington.

According to U.S. Trade’s World Trade Online, China alleges that U.S. subsidies provided its domestic renewable energy industry with an unfair competitive advantage. An article in a Chinese state-run news service refers to prior measures by the U.S. that placed tariffs up to 30 percent on imported photovoltaic products.

The request for consultation refers to Washington state’s Renewable Energy Cost Recovery Incentive Payment Program among disputed programs in California, Michigan and other states. In its document filed Aug. 14, China claims the program breaches the U.S.’s WTO commitments because qualifying customers are authorized to receive annual production incentives from utilities companies for “each kilowatt-hour of electricity generated by a renewable energy system,” and those utilities companies are then eligible for a tax credit for the incentive payments. It also mentions investment cost-recovery incentives. It is not known how or when the WTO will respond.

In the meantime, we continue to emphasize the high value of international trade and business relationships to our state’s economy. In case you missed it, below are linked some recent interviews featuring Gov. Jay Inslee, Chris Green, Senior Trade Adviser Robert Hamilton and me speaking with reporters about potential impact on businesses and jobs here.

Gov. Jay Inslee on CNBC https://www.cnbc.com/video/2018/07/12/jay-inslee-on-trade-and-tariffs-.html

Director Bonlender on China Global TV Network https://news.cgtn.com/news/3567544f33454464776c6d636a4e6e62684a4856/share_p.html

OEDC Assistant Director Chris Green on BBC from the Farnborough International Air Show https://business.facebook.com/WAStateCommerce/videos/1922450247822430/

Senior Trade Advisor Robert Hamilton on KING5 https://www.king5.com/article/news/local/washington-wheat-growers-urge-trade-not-aid/281-577837633

Boat builders feel the pressure of tariffs (Kitsap Sun)https://www.kitsapsun.com/story/news/local/2018/08/18/puget-sound-steel-tariffs-effect-kitsap-transit-fast-ferries/1009383002/

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