How Tariffs Will Affect the State of Solar in the U.S.A. in 2018
Posted on February 22, 2018 by Hank Boerner – Chair & Chief Strategist
Guest Column – By Kyle Pennell
The year 2018 did not start off well for the solar industry in the United States. In January, US President Donald Trump signed into law a 30% tariff on all imported solar panels, sending the entire renewable energy world into a controlled panic.
While the White House has repeatedly stated that this move is intended to help U.S. solar manufacturers who cannot compete with pricing coming out of China and India, there are many industry experts and environmentalists who have expressed a bleak outlook for the next several years of U.S. solar advancement.
What effect will Trump’s tariffs have on an industry that has been steadily growing since the 1970’s? What fortune, good or bad, will come from this ruling throughout 2018?
Trend: Foreign Producers Moving to the US
When signing the tariffs into law, President Trump stated that it was his hope to see foreign solar manufacturers move some of their production efforts to the United States. Jinko, a large Chinese solar company, seemed to take note of that, announcing plans to build a new plant in the US.(Jinko has an American subsidiary.)
Jinko announced in January 2018 that its board of directors have green-lit this U.S.-based plant’s construction, while subtly suggesting that their decision was a result of the tariff. They said in a prepared statement that the company “continues to closely monitor treatment of imports of solar cells and modules under the U.S. trade laws.”
Manufacturing products in the United States would allow Jinko the flexibility to avoid paying the tariff while continuing to affordably supply US installers with their products.
President Trump has been very vocal about his belief that the tariffs he has imposed on both imported solar panels and washing machines will coax more foreign companies into moving production state-side.
Foreign Countries Will Seek Compensation
The Trump Administration’s tariffs seem to have earned the ire of the global solar industry, with countries throughout Europe and Asia making official complaints with the World Trade Organization and seeking compensation from the US for what they believe is a WTO violation.
The Chinese government has filed an official WTO complaint against the United States, citing WTO provisions that they allege the U.S. has violated. It wasn’t long before the European Union followed suit, sending the United States a demand for compensation talks.
While the EU has not officially accused the US government of breaking WTO rules, it is seeking financial compensation on behalf of member-state Germany, a major solar hardware exporter.
There are some who fear that these filings could be the first step in an all-out trade war against the Trump Administration and the United States economy and business sector as a whole.
Thousands of American Jobs Will Be Lost
While the White House has touted these tariffs as a positive move for the American solar manufacturing industry, there are many who believe that this could spell the beginning of the end for the renewable power efforts in the United States — at least for the immediate future.
“Solar” is one of the fastest growing employment industries in the United States. The industry creates jobs at a rate 17% higher than the national average. The solar industry’s growth has been tied for years with the solar learning curve, which tells us that when prices fall by 20%, installations rise by 20%.
The Solar Energies Industry Association spoke out against these tariffs, alleging that increasing the cost of solar installations will slow the industry’s acceleration and lose upwards of 23,000 American jobs.
The SEIA went on to say that large investors will cancel projects that would have injected billions of dollars into renewable energy as a result of price hikes. It stands to reason that huge solar companies would look elsewhere for their expansions, where costs are limited, and incentives abound.
The SEIA was proven correct in their assumption, when the U.S. energy company SunPower postponed a planned $20 million expansion of its factories soon after the tariffs were announced.
Sun Power was seeking to grow its business in the California and Texas markets, but as a company that relies primarily on affordable hardware from the Philippines, this job creating environmentally-friendly expansion became economically-unwise.
“We have to stop our $20 million investment because the tariffs start before we know if we’re excluded,” SunPower CEO Tom Werner said in an interview with Reuters. “It’s not hypothetical. These were positions that we were recruiting for that we are going to stop.”
Those positions that SunPower stopped recruiting for are the first casualties of the Trump tariffs, but if the SEIA is to be believed, they will not be the last.
Questionable Motives, Questionable Future
President Trump has been a huge supporter of the domestic coal mining industry. During his successful 2016 presidential election bid, candidate Trump touted his support of “beautiful clean coal”, going as far as to bring it up once more in his January 2018 State of the Union address.
Many observers are tying this tariff to Trump’s unwavering support for fossil fuel power and are alleging that the president is seeking to wound the renewable industry to protect coal mining and fossil fuel power production.
Time Magazine even went as far as to call it “…the largest blow he’s dealt to renewable energy yet.”
But no matter what the president’s reasoning was, solar is a $28 billion industry which relies on foreign components for 80% of its manufacturing needs. Problems are going to arise.
While the world has benefited greatly from fossil fuel energy, the environment has suffered. It’s important to remember that technological evolution is the forefather or progress.
Examples abound: The rotary wired phone gave way to the cell phone. Blockbuster Video fell victim to streaming services. And we believe that fossil fuel power is destined to fall to renewable energy.
By blocking the advancement of solar, the U.S. federal government and the President of the United States are holding back the real potential of American energy efforts.
Thanks to Kyle Pennell from PowerScout (a home solar marketplace that lets consumers compare multiple quotes for home solar) for contributing this article.
- Information: powerscout.com