Whose Tariffs Are They? Trump’s or Tillerson’s

2018-04-18T20:59:32+00:00

Image may contain: ocean, sky, water, cloud, twilight, beach, outdoor and nature
This picture begs a thousand words. My favorite vista in all of Orange County sparkles here: Catalina in the background from Crystal Cove State Beach. We all hope that the at-risk states will be able to prevent drilling in this and other pristine ocean vistas around the country. Indeed, it didn’t occur to me until last week, when Donald Trump announced it, that the Florida coast is more beautiful than ours.

But, there’s more haze going on here than you see in this picture. Today all the newspapers announced Trump’s new tariffs on Chinese solar panels and South Korean washer/dryers. Yes, he was threatening to do that. What is interesting is the detail of the barriers he’s erected, a 30% price hike on imported solar panels. The telltale nuance though is its temporary nature. The tariffs will gradually decline (5% per year). Sounds reasonable. But, this approach disrupts the solar energy installation business in the U.S. Marketing 101 tells you that when consumers see that prices will be going down, they slam on the breaks on their purchases. Also, investors divest. The tariffs raise the price immediately, and then the long-term killer of the otherwise surging solar industry kicks in. Why buy in 2018 when prices will be much more attractive in 2020.

Who benefits by killing solar in the U.S.?

For one, Exxon does. Slow solar, and that increases the value of Exxon’s oil and gas assets. Also, slowing down the washer/dryer business with higher prices is also good for Exxon. New machines, particularly those coming out of high-tech South Korea, generally have more environmentally sustainable parameters. That is, they use less natural gas. So damaging both technology industries boosts oil and gas prices. Sounds like a Russian chess playing gambit doesn’t it. One Putin would like too!

According to Tillerson, “moron” Trump isn’t smart enough to figure all this out. But, you do have to be very smart indeed to be made CEO of Exxon. Boy-scout ethical, not so much.

One way to help our legislators and governors fight these shenanigans is for us consumers to take action. If Exxon bids on a tract for the now much more valuable oil drilling rights, then don’t buy gas at your local Exxon station. If Chevron bids, boycott them. And so on. There are some 40 million of us folks in California – the effects of a consumer boycott on oil company revenues can be great. There’s nothing quite so powerful as a protest via checkbook.

And, as I said in my previous posts, “Imagine an oil drilling rig in this picture. Tillerson and Trump can.”

Perhaps the creepiest part of this story regards a warning posted last month in Time Magazine: “Solar and Wind Power Face Serious Threats from the Trump Administration.” Beyond the warning about the Trump tax cuts hurting the renewable energy sector, it specifically mentioned the hazards of high tariffs on solar panels. Indeed, all this is reminiscent of the old Roger Rabbit red car story. GM, Firestone, and Standard Oil conspired to buy municipal light rail operations around the country, junk them, and then sell buses. Now Exxon and others may just buy control of the weakened solar firms, and at least slow them down. Creepy.