The Trump administration on January 22 said it would impose a 30% tariff on imports of solar modules and solar cells, in a high-profile trade case in which two struggling solar companies—Suniva and SolarWorld Americas—had asked for a levy on imports of closer to 50%.
The decision comes after the U.S. International Trade Commission (ITC) last year issued three separate recommendations for tariffs, after the group’s unanimous decision that photovoltaic (PV) solar cells being brought into the U.S. are causing “serious injury, or threat of serious injury, to the domestic [solar] industry.”
Suniva, a bankrupt solar panel manufacturer, and SolarWorld asked for tariffs and a floor price to be imposed on imported PV products, though most of the U.S. solar industry has opposed such action, saying it will raise the cost of solar installations and slow the adoption of solar power across the country. Today’s action excludes a floor price and also does not impose quotas on imports. The first 2.5 GW of solar cell imports annually are excluded from the tariff.
The administration said the tariff will decline by 5% each year in subsequent years, to 15% annually by 2022, with the tariff taking effect February 6, 2018, as is standard in such cases that call for duties being imposed 15 days after a decision. However, some investment analysts prior to today’s decision said the effective date could be pushed back to allow for more study of the tariff arrangement, and to allow exporting nations to apply for an exemption.
Suniva, SolarWorld Claimed ‘Serious Injury’
The decision comes nearly nine months after Suniva, a solar module manufacturer with a Chinese majority owner, asked for import levies on solar panels and cells. SolarWorld Americas, the U.S. arm of German manufacturer SolarWorld AG, soon after joined Suniva as a co-petitioner in the case, which was filed under Section 201 of the Trade Act of 1974. The two companies argued that increased imports of solar products had caused serious injury to the domestic industry.
According to Bloomberg New Energy Finance (BNEF), more than 80% of U.S. solar installations use imported panels, with most coming from Asia, including Malaysia, South Korea, China, Vietnam, and Thailand. BNEF reports $20 billion was invested in the U.S. solar industry in 2017, though year-over-year investment has fallen in each of the past two years from a high point of more than $30 billion in 2015.
Wood Mackenzie’s GTM Research group said a 30% tariff comes at a cost of about 10 cents to 15 cents per watt. The group estimates the additional cost could reduce U.S. utility-scale solar installations by 9%.
Interestingly, Suniva—which filed for bankruptcy protection in April 2017—and SolarWorld have said they needed the higher tariffs requested in their petition to remain in business. Suniva has not responded to requests for comment on the case.
Juergen Stein, president and CEO of SolarWorld Americas, in a statement said: “SolarWorld Americas appreciates the hard work of President Trump, the U.S. Trade Representative (USTR), and this administration in reaching today’s decision, and the President’s recognition of the importance of solar manufacturing to America’s economic and national security. We are still reviewing these remedies, and are hopeful they will be enough to address the import surge and to rebuild solar manufacturing in the United States.”
Stein continued: “We will work with the U.S. Government to implement these remedies, including future negotiations, in the strongest way possible to benefit solar manufacturing and its thousands of American workers to ensure that U.S. solar manufacturing is world-class competitive for the long term.”
Leading Solar Trade Group Disappointed
The Solar Energy Industries Association (SEIA), the national trade association for the U.S. solar industry, said it was disappointed in Trump’s decision, which was the president’s first opportunity to impose tariffs or trade restrictions on goods exported to the U.S. from foreign countries. (Today’s ruling also imposed tariffs on imports of residential washing machines to the U.S.)
The SEIA in a release said “the [solar] decision effectively will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing, and it will result in the delay or cancellation of billions of dollars in solar investments.” Estimates of the number of workers employed in the U.S. solar industry vary depending on methodology; the Department of Energy last year said about 374,000 people were employed by the industry. The SEIA, as well as The Solar Foundation, a nonprofit group that supports global solar technologies, both put the number at more than 260,000.
“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,” said Abigail Ross Hopper, the SEIA’s president and CEO.
“While we believe the decision will be significantly harmful to our industry and the economy, we appreciate that the president and the administration listened to our arguments,” Hopper said. “Our industry will emerge from this. The case for solar energy is just too strong to be held down for long, but the severe near-term impacts of these tariffs are unfortunate and avoidable.”
The tariff announcement was made by USTR Robert Lighthizer. “These cases [solar and washing machines] were filed by American businesses and thoroughly litigated at the International Trade Commission over a period of several months,” Lighthizer said. “The ITC found that U.S. producers had been seriously injured by imports and made several recommendations to the president. Upon receiving these recommendations, my staff and I conducted an exhaustive process which included opportunities to brief in person and through public comments, public hearings, and meetings with senior representatives. Based on this information, the Trade Policy Committee developed recommendations, which the president has accepted. The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers, and businesses in this regard.”
China Dominates Solar Manufacturing
A fact sheet from Lighthizer’s office said China’s industrial planning “has included a focus on increasing Chinese capacity and production of solar cells and modules, using state incentives, subsidies, and tariffs to dominate the global supply chain.”
According to the National Renewable Energy Laboratory in Golden, Colorado, and San Francisco, California-based SPV Market Research, six of the top 10 global solar panel manufacturers in 2017 are located in China. The International Energy Agency (IEA) says 60% of the world’s solar panels are now manufactured in China. The USTR today in its fact sheet said 71% of global solar modules are made in China.
Interestingly, a study from Stanford University last year said China’s success in the solar industry could be a model for U.S. solar policy, saying “by recognizing China’s key role, rather than resisting it … the United States will contribute most profoundly to the expansion of cost-effective solar energy globally and, in the process, grow a solar sector in the United States that is significant in scope and profitable over the long term.”
While the administration said the action was taken to protect U.S. workers, others saw the action differently. Tony Clifford, chief development officer for Rockville, Maryland-based Standard Solar, in the SEIA release said, “It boggles my mind that this president—any president, really—would voluntarily choose to damage one of the fastest-growing segments of our economy. This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries of an American taxpayer bailout.”
Kevin Steinberger, policy analyst in the Climate and Clean Energy Program at the Natural Resources Defense Council, in a statement said, “President Trump just placed a huge and unnecessary hurdle in front of an industry that’s hitting its stride. This shortsighted and counterproductive decision couldn’t come at a worse time. We can’t afford to handicap such a critical resource for powering America’s clean energy economy.
“The cost of generating solar energy from rooftop panels has plummeted by more than 85 percent in less than a decade, but President Trump’s action will reverse that progress. Higher-priced panels will dramatically reduce the pace of new solar energy installations, increase climate-changing emissions, and lead to significant job losses nationwide.”
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).