The tariffs that Trump imposed on imports of solar panels were struck down Tuesday by a federal judge. Trump was found to have clearly exceeded his authority when he increased the tariffs in last year.
More interesting than details of this trade dispute is the fact Judge Gary Katzmann of U.S. Court of International Trade made the decision over objections of Biden’s administration. They defended Trump’s court actions and wanted to have the matter dismissed. Instead of overturning an illegal order by the former chief executive officer, President Joe Biden ordered the federal government’s lawyers to argue for even more unilateral trade powers in the White House.
This may seem unlikely if you have been following trade policy over the last year. However, it is a worrying reminder about the continuation of poor trade policies between this administration and the previous one.
Trump issued a proclamation in October 2020 that added tariffs to some CSPV crystalline silicon photovoltaic cell (CSPV) components. This was a type of specific component of solar panels, previously exempted by Trump’s order of 2018 imposing tariffs onto a large range of other solar parts. Trump also made modifications to the previously imposed tariffs on solar panels so they declined from 20% to 18% in February this year to avoid being as high as 15 percent.
Trump Administration stated at that time that recusing the exemption for CSPV panels was needed because permitting those parts to import tariff-free had been “impaired” which would continue to affect the effectiveness of other solar panel tariffs. Trump claimed that the competition from lower-priced imports would slow down America’s solar panel manufacturing industry.
The Biden administration supported Trump’s actions in court documents. They claimed that Trump was simply trying to close an “loophole” in the old tariff rule.
Katzmann decided against Trump and Biden Tuesday. Trump’s Oct 2020 proclamation, according to Katzmann, “constituted both an obvious misconstruction of the statute” and an action that was not within the President’s authority.
Trump violated Section 201 of The Trade Act of 1974. This section gives the president the unrestricted authority to impose tariffs explicitly for protectionist purposes. But once tariffs are imposed, presidents are not allowed to hike those tariffs for at least three years—though there is some wiggle room for presidents to reduce them within the three-year window. The provision was specifically designed to stop presidents using tariffs in a negotiating tactic, as Trump has done. Additionally, it provides some stability for businesses affected by the new import duties.
Trump’s order for October 2020 clearly infringed the 1974 law. “Neither the statute nor the statutory scheme supports interpreting Section 204…to permit increased restrictions on trade,” Katzmann wrote in his ruling. The October 2020 changes Trump made must be reversed, though the 15 percent tariffs that underlie them will not change.
“Both actions were an illegal attempt to increase the Section 201 Tarifs,” Abigail Ross Hopper (president and CEO, Solar Energy Industries Association), stated in a statement lauding Katzmann’s decision.
This is because of two factors.
First, the Feds could have won the case. This would have given Biden (and future presidents) a new opportunity to unilaterally adjust tariff rates and tariff rates. It is yet another example of how the Biden administration is seeking to cement Trump’s executive overreach on trade as the new status quo—in much the same way as the Biden administration is aiming to use Trump’s warping of the idea of “national security” tariffs for its own ends.
There is also tension between the government and lawyers who are defending a policy originally put in place to stop solar panel imports. To meet Biden’s emission reduction targets by 2030, America will need to have a greater number of solar panels. The cost of solar panels shouldn’t be an issue. In fact, it doesn’t really matter what country they were made. However, consumers who can afford them will have more options.
The Biden administration should not be supporting the Trump administration’s protectionism policies. This time, both the Trump and Biden administrations lost in court.