May 11, 2018
California’s Energy Future: At the Crossroads
Dr. Conway's Climateside Chat, May 11, 2018
By Eliza Racine
The viability of the domestic solar industry came into question last year when two American solar panel manufacturers, Suniva and SolarWorld, filed a trade complaint to the U.S. International Trade Commission (ITC) citing an inability to compete with cheaper manufacturers abroad—most notably China, the world’s largest exporter of solar panels. The companies demanded that President Donald Trump impose a 50 percent tariff on imported solar panels, immediately condemned by nearly the entire domestic solar industry and a surprisingly bipartisan mix of solar supporters.
Despite (or perhaps due to) this backlash, Trump accepted one of the ITC’s suggested remedies on Jan. 22 and established a 30 percent tariff on imported solar panels slated to last four years. The tariff is scheduled to drop 5 percent per year down to 15 percent, and provisions were also made to allow for a modest amount of tariff-free imports.
While Suniva and SolarWorld jointly praised Trump’s decision and expressed hope he will bring the tariff up to 50 percent as they requested, they appear to have forgotten that Trump’s “America First” rhetoric has been focused on helping the private fossil fuel industry—not renewable—and that this tariff will cause more harm than good for the American solar industry.
Domestic solar manufacturers like Tesla are not seriously affected by this tariff, but others, like SunPower—which manufactures solar cells in Southeast Asia and packages them into panels in Europe—will suffer greatly. According to the Solar Energy Industry Association (SEIA), 88,000 jobs will be lost, a full 34 percent of the 260,000 Americans employed in the industry.
If the president really wanted to support American jobs, it would have been smarter to impose a small licensing fee, which would go straight to the manufacturers and not the government. But because Trump went for a tariff, he can choose against investing in solar energy despite its rapid growth over the years.
Even before the ITC’s decision, the industry was bracing for Trump interference. Trump’s stated opinions on solar are characteristically inconsistent and poorly-conceived. Throughout his presidential campaign, and even now at the start of his second year as president, Trump is an ardent denier of climate change and a loyal supporter of fossil fuels.
This isn’t the first time Trump’s wanted to impose tariffs on Chinese exports, either; much of his presidential campaign focused on punishing China for for “taking” American jobs, with no apparent consideration for the impacts on global—or domestic—markets. He also imposed a 20 percent tariff on imported washing machines, which pushed South Korea to complain to the World Trade Organization (WTO) as this decision will have a significant impact on South Korea-based Samsung Electronics and LG Electronics.
The new solar panel tariffs were implemented on Feb. 7 of this year, quickly bringing about a lawsuit from the US’s partner in the North American Free Trade Agreement, Canada. Seeing as 90 percent of solar panels installations in the US are imported, there is not enough time for American solar panel manufacturers to catch up with their foreign competitors.
With so much uncertainty in the air surrounding the future of American solar energy, the tariff puts the industry at great risk.
This ludicrous move by Trump can be challenged and potentially overruled by the WTO or other international trade groups. A similar imposition was attempted by former President George W. Bush in 2002 with a 30 percent tariff on imported steel that was supposed to last for three years. However, within one year, 200,000 Americans lost their jobs due to steel’s low supplies and increased prices, which resulted in $4 billion in lost wages from Feb. to Nov. 2002.
In Nov. 2003, WTO ruled that the steel tariff was illegal and was ready to penalize the U.S if it didn’t pay a $2 billion fine. However, it took, the European Union’s threat to impose counter-tariffs on American exports from swing states, like Florida oranges and Harley Davidson motorbikes from Wisconsin, to finally prompt Bush to lift the steel tariff in Dec. 2003.
The American solar industry was, until this tariff, the fastest-growing domestic industry. It has revolutionized the way our country produces, transports, and uses energy, but yet is still on the cusp of being a fully mature industry. A tariff is exactly what our solar industry, which is heavily reliant on cheap solar imports, does not need. It’s clear that this move was just an excuse for Trump to one-up China under the guise of “America First.”
Dr. Conway's Climateside Chat, May 11, 2018
Dr. Conway's Climateside Chat, April 26, 2018