solar panel installers

Some industry observers suggested that new tariffs on imported cells could particularly endanger job growth in solar panel installation—the fastest-growing U.S. job category. [Image: Pixabay]

On 22 January 2018, the Trump Administration slapped a 30 percent “safeguard tariff” on imports of solar cells and panels into the United States—the key target of the tariff being China, which dominates the market for these commodities. The Office of the U.S. Trade Representative said that a key aim of the tariff was to spur discussions to ensure “fair and sustainable trade throughout the whole solar energy value chain, which would benefit U.S. producers, workers, and consumers.” But the main solar industry trade association called the decision “a loss for America,” and argued that it would lead to the elimination of 23,000 U.S. jobs.

Four-year term

The tariff—announced at the same time as a separate protective tariff on imported automatic washing machines—stemmed principally from cases brought in May 2017 by two bankrupt U.S. solar panel manufacturers, Suniva Inc., based in the state of Georgia, and Solar World Americas, based in Oregon. Ironically, both companies, while nominally U.S.-based, are owned by foreign firms. Solar World Americas is a wholly owned subsidiary of the German photovoltaic maker Solar World. Even stranger, Suniva is majority-owned by Shunfeng International Clean Energy Ltd., a company based in China—the main country in the crosshairs of the new tariff.

The tariff itself has a four-year term. It would impose a 30 percent duty on imported solar modules and cells in the first year, which would ratchet down 5 percent per year in the subsequent three years, reaching 15 percent by year four. The first 2.5 gigawatts of imported solar cells in each year would be exempt from the tariff. That suggests that nearly 10 GW worth of cells could be affected, as the Solar Energy Industries Association (SEIA) estimated that some 11.8 GW of new photovoltaic installations came on line in the United States in 2017. While the tariff clearly targets China, it also explicitly includes a wide range of other countries, notably including South Korea, Canada and Mexico.

A “hollowed-out” industry

The Obama administration had imposed a similar tariff on solar panels from China in 2012, amid allegations of dumping of solar panels at below-cost prices onto the global markets by government-subsidized Chinese firms. But some observers argue that, at this point, the damage to the U.S. industry for conventional silicon-based solar cells has already been done, and the industry is beyond redemption.

The fact sheet on the tariff from the U.S. Trade Representative’s office acknowledges that “By 2017, the U.S. solar [cell] industry had almost disappeared.” And a recent New York Times editorial by Varun Sivaram, a fellow at the Council on Foreign Relations, asserted that the four-year window of the tariff is too short to stimulate meaningful investment toward resuscitating U.S. silicon-based solar cell production—which Sivaram called “a hollowed-out American industry in no shape to compete with the huge scale of Asian producers.”

Collateral damage

Meanwhile, SEIA predicted baleful effects of the tariff on U.S. jobs in the solar industry. The association noted that only a tiny fraction of the estimated 38,000 manufacturing jobs in U.S. solar (as of the end of 2016) were in panel manufacture; the vast majority were in ancillary products such as racking systems, inverters, concentrators, trackers and other products. Sivaram further noted that installation of solar panels—which is, according to the U.S. Bureau of Labor Statistics, the fastest-growing occupational category in the country—would suffer from the price hikes and lower installation demand that the tariffs would impose.

As a result, SEIA concludes, the tariff decision “effectively will cause the loss of roughly 23,000 American jobs this year,” and “will result in the delay or cancellation of billions of dollars in solar investments.” Also in the background is the possibility of retaliation by other countries. On the same day as the tariffs were announced, the Reuters news service noted that a variety of countries and regions, including South Korea, China, and the European Union, were mulling various possible responses.

Finally, Sivaram, in the Times editorial, noted that the tariff will do nothing to promote investment in U.S. solar innovation (in such areas as perovskite photovoltaic technology), which he called “the only hope for the American solar manufacturing industry to wrest back market share from the Asian giants.”