US President Donald Trump signed into law a steep tariff on imported solar panels on Tuesday (23 January), a move billed as a way to protect American jobs but which the solar industry in the US and Europe said would lead to thousands of layoffs and raise consumer prices.
The 30% tariff on solar panels is among the first unilateral trade restrictions imposed by the administration as part of a broader protectionist agenda to help US manufacturers, but which has alarmed Asian trading partners that produce lower cost goods. The administration also introduced a tariff on imported washing machines.
“You’re going to have people getting jobs again and we’re going to make our own product again. It’s been a long time,” Trump said as he signed the order.
But the solar industry countered that the move will raise the cost of installing panels, quash billions of dollars of investment, and kill tens of thousands of jobs, raising questions about whether Trump’s move will backfire by triggering mass layoffs.
“We are not happy with this decision,” said Abigail Ross Hopper, president of the US Solar Energy Industries Association, on a conference call with reporters on Tuesday. “It’s just basic economics – if you raise the price of a product it’s going to decrease demand for that product.”
The leading solar trade group predicted that the tariffs could cut forecasted solar installations this year by nearly 20%, to 9 gigawatts from 11 gigawatts, and lead to the loss of 23,000 jobs in the United States, the world’s fourth-largest solar market after China, Japan and Germany.
Critics in Europe
A similar criticism was heard across the Atlantic from trade association SolarPower Europe, which said Trump’s decision “will inevitably lead to a contraction of the market with its implied loss of jobs”.
“These policies have been tried in many parts of the world and in not one case have the measures lead to more jobs, more manufacturing and more value,” said James Watson, CEO of SolarPower Europe, adding it will impact the whole manufacturing value chain, such as polysilicon, mounting frames, inverters and trackers that are produced in Europe.
“These types of barriers simply slow the energy transition and give highly polluting forms of power generation longer life,” Watson said.
Research firm Wood Mackenzie estimated that over the next five years the tariffs would reduce US solar installation growth by 10 to 15%.
The US solar industry employs more than 260,000 workers – about five times more than the coal industry – with the vast majority involved in installation rather than panel manufacturing.
US Republican Senator John McCain of Arizona, a big solar power producing state, said in a Twitter post that the tariffs amount to “nothing more than a tax on consumers.”
The main beneficiaries include US-based solar manufacturers Suniva and SolarWorld – both controlled by foreign parent companies. They petitioned for the trade relief arguing they could not compete with the cheap imports that have caused panel prices to fall more than 30% since 2016 and asked for the equivalent of a 50% tariff.
Suniva on Monday said the tariffs were “necessary,” while SolarWorld said it was “hopeful they will be enough.”
Bankrupt Suniva is majority-owned by Hong Kong-based Shunfeng International Clean Energy, and SolarWorld is the US arm of Germany’s SolarWorld AG.
Research firm CFRA said it expects the tariffs to increase solar system prices by about $0.10 per watt. It reckons First Solar, a US company with offshore panel manufacturing whose technology is not included in the tariff, would be the biggest beneficiary, while China manufacturers such as JinkoSolar would be the biggest losers.
Globally, solar capacity soared to almost 400 GW last year from under 10 GW in 2007, according to the International Renewable Energy Administration.
China, the world’s biggest solar panel producer, branded the move an “overreaction” that would harm the global trade environment for affected products.
“The US’s decision … is an abuse of trade remedy measures, and China expresses strong dissatisfaction regarding this,” Wang Hejun, the head of the commerce ministry’s Trade Remedy and Investigation Bureau, said in a statement on its microblog.
“China will work with other WTO members to resolutely defend its legitimate interests in response to the erroneous US decision.”
South Korea’s trade minister Kim Hyun-chong said the new US tariffs violated World Trade Organization (WTO) rules.
“The United States has opted for measures that put political considerations ahead of international standards,” Kim told a meeting of industry officials. “The government will actively respond to the spread of protectionist measures to defend national interests.”
Trump dismissed the prospect of a trade war and said during the signing that “a lot of manufacturers” will come to the United States to build solar plants.
The EU and China came close to a trade war in 2013 over EU allegations of dumping against Chinese solar panel exporters.
The European Commission slapped punitive tariffs on solar panels and cell imports from China in December 2013 in a move to guard against what it saw as dumping of cheap goods in Europe.
EU member states cleared an 18-month extension of the import duties in February 2017. The Commission said at the time that it envisaged a gradual phase-out of the duties over the period. The prices will be cut every three months, starting on Oct 1 2017, the Commission said, and finally on July 1 2018.
The duties are set to expire in September 2018.