World Economy

Taiwan Demands Compensation for US Solar Safeguard Tariffs

US is imposing a 30 percent tariff  on imported solar panels.
US is imposing a 30 percent tariff  on imported solar panels.

Taiwan has joined South Korea in demanding compensation for steep US tariffs on solar panels, opening a 30-day window for negotiations, a World Trade Organization filing showed on Tuesday.

Last week US President Donald Trump signed into law a 30% tariff on imported solar panels, billed as a way to protect American jobs but which the solar industry said would lead to layoffs and raise consumer prices, Reuters reported.

It was among the first unilateral trade restrictions imposed by the administration as part of a broader protectionist agenda that has alarmed Asian trading partners producing cheaper goods.

Taiwan, with no fossil fuel resources but a booming tech sector, says it ranks as the world’s second largest solar cell manufacturing base after China, putting it at the heart of an industry caught up in a global trade battle.

The United States, India and China are all racing to develop their solar industry, a huge growth area as the world moves toward environmentally friendly sources of energy, and are engaged in legal fights to keep their firms in pole position.

The United States has alleged that China and India are giving their solar sectors an illicit leg-up, and last week Trump resorted to “safeguard” tariffs, effectively shielding US solar manufacturers from foreign competition.

Safeguard tariffs are allowed under WTO rules to protect a particular sector from a sudden, unforeseen and damaging surge in imports.

But the WTO’s Agreement on Safeguards says any country imposing safeguard tariffs must “endeavor to maintain a substantially equivalent level of concessions and other obligations”.

In other words, the United States is expected to balance its solar restrictions by letting suppliers such as Taiwan impose restrictions of equal value on US exports.

If there is no agreement, Taiwan can put unilateral sanctions on US trade—but, according to the WTO rules, not for three years, giving Washington a substantial period in which it can protect its solar industry for free.

The WTO has no record of a negotiated safeguards settlement, and safeguard tariffs are often contentious, producing 47 formal disputes in the WTO’s 23-year history.

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