The decision by the Trump administration to impose 30% tariffs on all imported solar photovoltaic panels is typical administration grandstanding, with the likely impact to kill U.S. solar industry jobs. It’s Trump’s bluster with little chance of positive results.
The administration ostensibly said it was moving against China, which has been a leading importer of solar panels that are cheaper than U.S. companies can manufacture. The argument of the administration was that low-cost panels from China were hurting U.S.-based companies that couldn’t compete with below-cost PV arrays, costing the U.S. jobs.
Two domestic manufacturers – Suniva, ironically a Chinese-owned firm based in Norcross, Ga., and Solar World USA, a German-owned company with its U.S. operations based in Oregon — in 2017 filed a complaint under Section 201 of the 1974 Trade Act with the U.S. International Trade Commission. Suniva was in chapter 11 bankruptcy protection. Solar World’s German parent has already filed the equivalent of U.S. bankruptcy in Europe and many expect the U.S. subsidiary to follow suit, despite the Trump administration’s tariffs.
The ITC decision, which the White House quickly endorsed, broadened the request for a protection tariff beyond China to everywhere else in the world. Chad Brown, a trade expert at the Peterson Institute for International Economics, pointed out soon after the Suniva and Solar World Section 201 filings that the U.S. “imposed antidumping and countervailing duties on imports from China beginning in 2011 and Taiwan in 2014. The problem for the struggling U.S. industry is that there was a surge of new solar imports from Malaysia, South Korea, Singapore, Mexico, Thailand, and Vietnam.”
Brown predicted a “tsunami of demand for protections against imports of hundreds of other products” from Trump’s decision on solar panels (and washing machines). He said the decision “would probably lead to costs for the U.S. economy, a slowing of efforts at climate mitigation, and retaliation by trading partners.”
The imposition of 30% tariffs on solar panels, declining by 5% per year, are probably not enough to rescue the business prospects for Suniva and Solar World, which had requested 35% tariffs. Most of the U.S. solar industry opposed the move by Suniva and Solar World, Abigail Ross Hopper, president of the Solar Energy Industries Association, the industry’s Washington lobbying group, told Greentech Media, “While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs.”
For the U.S. solar industry, their largest cost is not the solar panels, but the infrastructure needed to market and install them, including construction workers planting the panels on consumers’ roof tops. Estimates of the impact of higher cost panels on installation vary and are highly uncertain, but it seems probable that high-paying jobs will be lost as a result.
The Trump administration’s move on solar could also trigger trade wars. South Korea (major washing machine manufacturer) has said it will file complaints at the World Trade Organization over the U.S. action. China is expected to follow. According to Chad Brown, the U.S. has a poor record in its defense of Section 201 cases, which are rare to begin with.
Retaliation could also be on the agenda. Bloomberg reported that China may cut back on its import of U.S. soybeans in favor of South America producers. The country is the largest buyer of U.S. soybeans “at a time when growing production and inventories have weighed on prices and intensified the battle between the U.S. and South America for market share. Could the crop get sucked into a China-U.S. trade dispute?”