by Ajay Narayan
Ahead of president Donald Trump’s decision to impose 30% tariffs or border taxes on imported solar panels, solar advocates were wary about the impacts of the tariffs. Abigail Hopper, the President of Solar Energy Industries Association, even expressed his concern stating that the imposition of tariffs would create a crisis for the solar industry and threaten nearly 260,000 American jobs in the sector. Now that it has been almost 6 months since the announcement of tariffs, how has the solar industry changed? Has the decision really impacted the solar industry in a negative way or are the concerns exaggerated? Let’s find out.
Background on President Trump’s Solar Tariff
On January 22, President Donald Trump imposed a 30% tariff on solar imports to the US. The solar imports include both imported solar cells, which are used in manufacturing solar panels, and solar modules, also known as solar panels. The initial announcement also included:
- The tariffs would decline over a period of four years, dropping to a 15% tariff in 2021
- The first 2.5 gigawatts of imported solar cells would be excluded from the additional tariff
Why was the Decision Taken?
The proposal to impose tariffs on solar imports was recommended by the U.S. Trade Representative (UTR) to President Trump after consultation with the interagency Trade Policy Committee and after considering the findings of the U.S. International Trade Commission, which found that the imports of low-cost solar panels were affecting U.S. manufacturers negatively.
Which Countries are Covered?
The tariff is applicable to imports from any foreign country, but the focus of USTR is on China. Thanks to China’s policies and subsidies, its share of global solar cell production catapulted from 7% in 2005 to 61% in 2012. As most of USA’s solar panels are from China, the move is being seen as a jab at the country.
What Does it mean for American consumers?
When we talk of tariffs, they are of two types:
- Fixed percentage tariff
- Fixed dollar amount tariff
Fixed percentage tariff is better for consumers as its impact on prices lessens each year as the price of imported product falls. Now that the cost of solar panels has continued to shrink for the past few years due to advances in manufacturing, the impact of the tariff on the prices is expected to be small.
How has it Impacted US Solar projects?
According to a Reuters report, President Trump’s decision to impose tariffs on solar imports has led the solar energy companies in the U.S. to shelve investments of more than $2.5 billion in large installation projects. For example:
- Clean energy research firm, GTM Research, lowered its utility-scale solar installation forecasts in the US by 20% for 2019 and 17% for the year 2020, citing recently imposed tariff
- SunPower Corp. opposed the tariff because the levies will also negatively affect its domestic installation and development business, along with its overseas manufacturing operations
However, Trump’s imposition of the tariff on solar imports has given a boost to the domestic manufacturing sector, which is expected to significantly raise U.S. panel production and reduce prices in the coming few years.
How is the Move Affecting Solar Jobs?
While the U.S. solar industry adjusts to the tariffs, Americans eagerly wait for the jobs that the President promised while announcing the move. Here are some examples that are sure to make American job seekers happy:
- Solar panel manufacturing companies First Solar and Jinko Solar have recently announced their plans to spend $800 million to increase the construction of panels in the US after the tariff implementation, creating about 700 new jobs in Florida and Ohio.
- After the announcement of the tariffs, SunPower Corp. the US solar company purchased U.S. manufacturer SolarWorld’s Oregon factory, saving that company’s 280 jobs.
- Heliene, a Canadian company, is also planning to open a U.S facility which would produce 150 megawatts worth of panels per year and employ 130-140 workers in Minnesota.
But what has got the job seekers worried is the fact that in the solar manufacturing sector, only a small portion of jobs are in the manufacturing of cells and modules. Most manufacturing jobs are in equipment manufacturing, such as solar trackers, inverters etc. Considering this fact, the loss of American solar jobs due to tariff imposition would be much bigger than the new jobs created.
Conclusion
Imposition of a solar tariff is not just about the domestic solar manufacturing sector. It will have implications for the global solar market and a low carbon economy we all have been aiming for. That being said, a better alternative would be to build a robust, innovative and competitive business environment for the solar industry than protecting a small part of the industry.
