Trump Tariff on Solar Panels

On January 23, 2018, the White House announced a four year tariff on solar panel imports into the United States. The decision stemmed from a petition filed by Suniva, Inc. and supported by SolarWorld Americas, Inc. with the United States International Trade Commission (ITC) back in April 2017. This petition sparked an investigation by the ITC under section 202 of the Trade Act of 1974. Suniva requested tariffs of $0.25/watt on CSPV cells and $0.32/watt on CSPV modules for the initial year, with downward adjustments in years 2-4 in its pre-hearing brief. In a report to the President issued November 13, 2017, the ITC determined that crystalline silicon photovoltaic cells and modules (CSPV) are being imported into the United States in such increased quantities as to be a substantial case of injury or threat of injury to the domestic CSPV producing industry. The ITC Commissioners did not agree on the tariff rates. Commissioner Irving A. Williamson and Vice Chairman David S. Johanson agreed on module tariffs at 30% and decreasing by five percentage points in years 2, 3, and 4; and, they agreed that cell tariffs below the quota would be 0%, with a quota of 1 gigawatt in year 1 and increasing by .2 gigawatts in each of the subsequent three years, with tariff percentages above the quota the same as for modules. Chairman Schmidtlein recommended higher remedies, and Commissioner Broadbent recommended quantitative restrictions on imports of CSPV products. The President
chose to impose tariff rates on both cells and modules of 30% in year 1, decreasing by 5 percentage points in each of the subsequent three years. The first 2.5 gigawatts will be excluded from the additional tariff.

Reaction to the tariffs has been mixed. Bloomberg New Energy Finance does not expect the tariffs to benefit U.S. manufacturers that much since the tariffs only last 4 years and decrease every year. Faith Birol, Executive Director of the International Energy Agency was quoted in Bloomberg BNA’s Energy and Climate Report as saying that the global solar industry would adjust and that she did not believe the decision would reverse solar expansion in the United States. There has even been speculation that some companies may stand to gain from the new tariffs. Brian Eckhouse reports that First Solar in Tempe, Arizona as well as Tesla will benefit from the fact that both manufacture some panels in the United States; Tesla recently opened a plant in Buffalo along with Panasonic to manufacture solar equipment.

Other U.S. based companies may be hoping to get exemptions from the new tariffs. For instance, SunPower Corp., which manufactures most of its panels in Asia and Mexico may seek an exemption based on the fact that the company produces a high efficiency model with wires on the backside of the panel, thus maximizing space for the generation of electricity on the front of the panel. According to CEO Tom Werner, this means that SunPower’s panels produce more power and may be sold at a higher price than its Chinese competitors. Additionally, the company may argue that the tariff will prevent it from spending money on next generation technology or investing in a factory in the United States near its San Jose, California headquarters.

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