The solar energy industry recently received a blow from the Trump administration. President Trump imposed a 30 percent tariff on imported solar cells and modules. The tariff will decrease to 25 percent for the second year, 20 percent for the third year and 15 percent for the fourth year.
In April, Suniva, Inc., a Chinese owned U.S. based manufacturer of solar panels, filed a petition with the U.S. International Trade Commission for global safeguard relief for imports of crystalline silicon solar photovoltaic cells and modules. They filed for relief under Sections 201 and 202 of the Trade Act of 1974. Suniva filed for bankruptcy a little over a week before filing for relief with the ITC. SolarWorld Americas, a solar module manufacturer, joined Suniva as a co-petitioner in May. The ITC launched an investigation after Suniva filed for relief and recommended a 35 percent tariff for the first year.
Lost American jobs and investment
Trump’s tariff will cost about 23,000 American jobs, and result in the delay or cancellation of billions of dollars in solar investments, according to the Solar Energy Industries Association (SEIA). A report by Environmental Defense Fund estimates that solar installations will decline by nine percent. Utility-scale solar will be the sector hardest hit. Solar energy deploys 260,000 workers, according to the report, while the coal industry employs 160,000 workers. Wind and solar energy jobs outnumber coal and gas jobs in 30 states.
The solar industry had less growth in 2017, compared to 2016. Third quarter solar installations were 51 percent less than 2016 levels. The price of solar increased in all market segments during the third quarter of 2017. The EDF report attributes the decreased growth and price increases to the shadow cast over the industry by the Section 201 petition. As a blog post by SEIA put it, the Section 201 trade case “threatens to raise the cost of solar and cause tens of thousands of Americans in solar to lose their jobs.”
Tariffs equal taxes on families
That threat is now upon the solar industry and some folks are unhappy. U.S. Senator Ben Sasse, a Republican from Nebraska, spoke out against the tariff. “Here's something Republicans used to understand: Tariffs are taxes on families. Moms and dads shopping on a budget for a new washing machine will pay for this - not big companies. You don't fix eight years of bad energy policy with bad trade policy,” he said in a statement.
The governors of four states (Nevada, Colorado, Massachusetts and North Carolina) wrote a letter to the ITC in September against the Section 201 petition. The letter cites a study by GTM Research that found the tariff and price floors would cause the prices of solar modules to double, and cause solar installations to decrease by over 50 percent in 2019.
“The requested tariff could inflict a devastating blow on our states’ solar industries and lead to unprecedented job loss, at a steep cost to our states’ economies,” the letter states.
Tariffs don't equal new manufacturing
The tariff may not be devastating to the solar industry. An analyst at Bloomberg New Energy Finance estimates that the cost of residential solar systems will increase by only three percent, while the cost for large solar farms will increase by less than 10 percent. However, the tariff will “destruct some demand for new projects in the next two years,” the analyst Hugh Bromley said. “But they will likely prove insufficient in magnitude and duration to attract many new factories.”
In other words, while the tariff may not be devastating, it will not have the desired effect of giving the U.S. solar manufacturing industry a boost.
Trump also levied a tariff on washing machines
Solar panels are not the only items that Trump levied a tariff on. He also approved a 20 percent tariff on large residential washing machines for the first year. The tariff would decrease to 18 percent in the second year and 16 percent in the third year. Whirlpool filed a petition in May with the ITC, describing Samsung and LG as “serial violators” of U.S. trade law.
Samsung released a statement against the tariff, calling it a “tax on every consumer who wants to buy a washing machine.”
LG announced to its U.S. retailers that it will increase the price of washing machines in response to the tariff from 20 percent to 50 percent, The Washington Post reports. “As a result of the trade situation, we will be initiating pricing actions, which will be sent under separate cover shortly,” Thomas Yoon, LG executive vice president, told retail partners in a memo.
U.S. Trade Representative Robert Lighthizer said in a statement the tariffs levied by Trump “makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses in this regard.”
Only someone living in serious denial would think that the tariffs on solar cells and modules and washing machines help American workers and businesses. It only helps Whirlpool, Suniva, and SolarWorld.
Image credit: Andreas Gucklhorn, Unsplash