Trump’s Solar Tariffs Catching Growing Criticism
President Donald Trump’s decision earlier this week to impose safeguard tariffs on imported solar cells and modules, has been met with growing opposition, from industry groups to free traders.
On Monday, the president took action under Section 201 of the Trade Act of 1974 which authorizes him to place tariffs in response to an International Trade Commission determination that increased imports are a substantial cause of serious injury to domestic producers. The ITC made such a finding but the ultimate decision to take action was Trump’s. The ITC investigation was instigated by petitions from Suniva and SolarWorld, two US solar panel manufacturers that are now bankrupt.
The additional duties Trump levied on imported solar cells and modules will amount to 30 percent for the first year, 25 percent for the second year, 20 percent for the third year, and 15 percent for the fourth year. The first 2.5 gigawatt of imported cells are excluded from the additional tariff.
Experts say that given the current moribund state of US solar manufacturing and the facts that the new tariffs last for four years and ratchet down rapidly, will do little to spur US manufacturing in this sector. Instead, solar energy users, from utilities to homeowners, may see their costs increase as imported panels become more expensive and solar installers and manufacturers of related products may see business go down.
The Solar Energy Industries Association (SEIA)—the national trade association for the US industry—and its members not surprisingly expressed disappointment in Trump’s decision. SEIA says the decision will cause the loss of 23,000 American jobs this year, including manufacturing jobs, and will result in the delay or cancellation of billions of dollars in solar investments.
“While tariffs in this case will not create adequate cell or module manufacturing to meet US demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving,” said Abigail Ross Hopper, SEIA’s President and CEO.
“It boggles my mind that this president would voluntarily choose to damage one of the fastest-growing segments of our economy,” said Tony Clifford, chief development officer at Standard Solar. “This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries of an American taxpayer bailout.”
SEIA estimates that a tariff at this level will eliminate, not add to, American manufacturing jobs. There were 38,000 jobs in solar manufacturing in the US at the end of 2016, and all but 2,000 made something other than cells and panels, the subject of this case. Those 36,000 Americans manufactured metal racking systems, high-tech inverters, machines that improved solar panel output by tracking the sun and other electrical products.
“There’s no doubt this decision will hurt US manufacturing, not help it,” said Bill Vietas, president of RBI Solar in Cincinnati. “The US solar manufacturing sector has been growing as our industry has surged over the past five years. Government tariffs will increase the cost of solar and depress demand, which will reduce the orders we’re getting and cost manufacturing workers their jobs.”
“This is a bad day for the US,” said Costa Nicolaou, president and CEO of PanelClaw, an American racking company. “What’s most disappointing is that the president sided with two foreign-owned companies and didn’t listen to Americans from across the country and political spectrum who understood tariffs will cause great economic pain for so many families in the solar sector.”
Political conservatives in Washington, sometime Trump allies but also traditional backers of free trade, are also denouncing Trump’s solar tariffs.
“We believe that trade policy, through specific cases or more generally, should not be about tipping the scale toward one American industry or interest group over another,” Tori Whiting, a researcher at the conservative Heritage Foundation, told a Washington audience earlier this week. Heritage in the past has opposed tax credits to encourage solar installations.
Senator Ben Sasse, a Republican from Nebraska and a conservative, also blasted the president’s decision. “You don’t fix eight years of bad energy policy,” he said in a statement, “with bad trade policy.”
Interestingly, environmental activist and former US Vice President Al Gore took a softer tone on Trump’s actions. “It really did not start with him,” he told an audience at Davos, according to Politico. “This was a trade action brought by private companies.” He added that the president chose a “midpoint in the range of alternatives,” making Trump’s solar tariffs “not an utter catastrophe.”
There are two bigger issues to consider. One is that Trump will increasingly impose new tariffs—“I want tariffs. Bring me some tariffs!” Axios reported the president told aides in August—as a symbol of his economic nationalism, divorced from any sensible economic and policy analysis. It may also encourage manufacturers in other industries to petition the ITC, figuring that Trump will eventually help them with protectionist measures, whether it makes any sense or not.
The second issue is suggested by Sasse’s statement: that this may have more to do with energy policy than trade. It’s well known that Trump is a cheerleader for fossil fuels and a skeptic when it comes to renewables. What he accomplished with this action was to restrict the development of renewable energy in the US.