As Republican front-runner Donald Trump threatens a trade war with China, Washington state is getting a bitter taste of the stakes involved.
Washington, the nation’s most trade-dependent state, sends nearly a quarter of its exports to China, which ranks as its largest trading partner.
On Monday, that relationship took a hit when REC Silicon said it would temporarily shut down its operations in Moses Lake, Washington, citing a dispute with China over tariffs on solar panels. The company produces polysilicon, which is used to make the panels.
Democratic Sens. Patty Murray and Maria Cantwell joined Gov. Jay Inslee in calling for an immediate end to the dispute over tariffs imposed by the U.S. and China. Eric Schinfeld, president of the Washington Council on International Trade in Seattle, said the company’s decision was a prime example “of why we can’t afford to get into a back-and-forth trade battle” with China.
“Our two economies are inextricably linked,” he said Tuesday.
Indeed, a trade rift with China would be particularly costly for Washington state, where studies have shown that nearly 40 percent of jobs are tied to global commerce.
With its relative proximity to Asia, Washington state sent nearly 23 percent of its $20.7 billion in exports to China in 2014, according to the International Trade Administration. Canada ranked a distant second as a recipient of the state’s exports, with $9.3 billion.
REC Silicon, which employs roughly 720 workers in Moses Lake in central Washington, said it would not lay off any workers but would shift them from production to maintenance with the shutdown, which is expected to last at least until June. The company used a $154 million grant from the 2009 American Recovery and Reinvestment Act to complete a $1.7 billion expansion project in 2010.
In a statement, Inslee called the company’s announcement “a disappointing development” and said REC Silicon “is now unfairly caught in an international trade dispute that threatens its survival.” He wrote a letter last year to President Barack Obama urging a resolution and brought up the subject with Chinese President Xi Jinping when Xi visited Seattle in September.
The dispute began in 2012, when the United States accused China of dumping solar panels below cost on the U.S. market and imposed tariffs. China responded in 2013 by placing tariffs on polysilicon made in the United States. Now Chinese producers who want to buy from REC Silicon must pay a 57 percent import duty, which is leading them to go elsewhere.
Murray and Cantwell said they had also met with top Chinese trade officials in an attempt to end the dispute.
This is too important for workers and our local economy to wait any longer.
Washington state Democratic Sen. Patty Murray
“This is too important for workers and our local economy to wait any longer,” Murray said.
Republican Rep. Dan Newhouse, whose congressional district includes Moses Lake, called the situation “an urgent matter” and said the Chinese Ministry of Commerce and the U.S. trade representative needed to get together to negotiate a solution.
Schinfeld said negotiations were the only answer: “We’re seeing the impact of the alternative.”
REC Silicon’s decision comes just three months after the state suffered a similar blow: Because of its competition with China, Alcoa announced that it would idle its aluminum smelting operations at Intalco Works in Ferndale, Washington, and at its Wenatchee, Washington, plant.
Last week, Democratic Rep. Suzan DelBene of Washington state said displaced Alcoa workers would be eligible for trade-adjustment assistance from the federal government, including long-term career training. At the same time, DelBene, co-chair of the Congressional Aluminum Caucus, said she wanted an investigation into how Chinese companies could be gaining an unfair advantage due to market manipulation.
As the issue heats up in the presidential race, Trump has made the U.S. trade deficit with China a pillar of his campaign, saying Americans are getting hurt by the growing imbalance and that the U.S. needs to impose higher tariffs.
Other candidates are taking aim at global trade pacts in general, such as the Trans-Pacific Partnership, a 12-nation deal promoted by Obama but now opposed by both Democratic presidential candidates, former Secretary of State Hillary Clinton and Vermont independent Sen. Bernie Sanders.
I try not to take too seriously what any presidential candidate says on the stump.
Eric Schinfeld, president of the Washington Council on International Trade in Seattle
“I try not to take too seriously what any presidential candidate says on the stump,” Schinfeld said.
But after the U.S. Commerce Department reported last Friday that the trade deficit with China had hit a record $365.7 billion in 2015, critics said it was easy to see why the issue was gaining traction with angry voters.
$365.7 billion Amount of the record U.S. trade deficit with China in 2015
Some warned that workers may continue to pay the price if there’s no intervention soon from Washington, D.C.
“Until the president and Congress get serious about balancing our record trade deficits with China – and insist that Beijing honors all of its trade obligations – American factory workers will continue to struggle,” said Scott Paul, president of the Alliance for American Manufacturing.
Kevin Kearns, president of the U.S. Business and Industry Council, said it was clear that America’s experience in trading with China had been “a miserable failure,” sending U.S. jobs and production to a country that had shown little interest in adhering to global trade rules.
“Trump is right that tariffs are necessary,” Kearns said. “We’ve had 15 years of chitchat diplomacy.”