By Kenneth Rapoza, CPA Industry Analyst
Latest move to protect US solar manufacturers irks the Made in China importers who have vowed to fight it.
President Trump’s latest salvo to the US solar industry on Saturday is an example of domestic trade policy put into action. The President rightly acknowledged a loophole in the 2018 solar tariff had been exploited by importers. His action on Saturday to shut down that loophole will preserve thousands of US solar manufacturing jobs. But while supporters of US solar power manufacturing cheered, many who are reliant on cheap imports from China jeered.
One of the best known trade associations in solar – the Solar Energy Industries Association (SEIA) – released a scathing attack on the President’s proclamation. But why would a Washington DC based trade association, lobbying US lawmakers, bemoan the President’s industry saving proclamation? Because SEIA is more interested in imports – primarily from China – and have less interest in supporting or growing US manufacturing.
While the world wakes up from its nap on China – many politicians on both sides of the aisle are understanding the labor and humanitarian violations of the Chinese Communist Party. They are realizing what Made in China 2025 means and how China seeks global dominance in its Belt and Road Initiatives. These are the harsh realities of a totalitarian regime and the days of inside-the-beltway lobbyists doing the bidding for Chinese enterprises are coming to an end.
We believe that for a prosperous America you need economic and national security as the twin pillars of our country. Any policy that offshores critical technology or makes our supply chains vulnerable to our adversaries is ill advised. If the US had continued down the path advocated by SEIA, we would have seen greater harm to domestic manufacturers and only more imports from the heavily subsidized, non-market business practices of China’s solar industry. Of the top 10 solar panel makers in the world, 8 are from China.
President Trump issued a proclamation on October 10 that removes the exemption from tariffs for bifacial (two-sided) solar panels, and slows the decrease of tariffs to 18 percent instead of 15 percent for solar cells and solar modules, or solar panels, most of which are imported from China or from Chinese companies’ factories elsewhere in the world.
See our press release on this here.
Trump’s new proclamation is scheduled to go into effect on October 25 — 15 days after it was issued — but PV Magazine, an industry trade publication, reported on Monday that its impact on the sector is unclear because he may not be president next year.
SEIA CEO Abigail Ross Hopper let it be known in a statement on Monday that, they’re against this action, saying that “aspects of (the) policy may also run counter to law…. We are going to consider every option to reverse this harmful approach. We also will be talking with leaders in the next administration, regardless of who is president, about the harm of solar tariffs.”
Tariffs have not led to higher prices, nor has it hurt demand at this time. What Hopper is really saying is – the policy is harmful to our largest supplier, China.
Further in 2019, solar prices continued to fall despite the tariff. Installations of solar panels rose. The forecasts are that this year will be a record setter for solar installation. If we want the economy to recover from a pandemic, why not recover by building those solar cells and solar panels, including the two-sided ones no longer exempt, right here at home? Isn’t that exactly what China would do? Of course it is. Who thinks that China’s greening of its economy is going to come from factory imports of windmill makers in the Netherlands? We don’t. And certainly no trade association in Beijing would convince Xi Jinping to import more US solar cells or modules.
“SEIA said the tariffs would cause a downturn in the industry, but the industry continues to grow strongly, despite the pandemic. SEIA was wrong before and they are wrong now,” says Jeff Ferry, the chief economist for the Coalition for a Prosperous America. “The industry will continue to grow because the economic fundamentals of solar are positive. There will be a need for more solar cells, more modules, more installers, everything up and down the supply chain, and all of it should be US-made.”
Before the solar tariffs, Woods Mackenzie in March 2017 had forecast some 55.5 gigawatts of new solar power would be installed between 2018 and 2021. In December 2019, the same firm forecast 58.4 gigawatts to be installed over the same period. Solar is one of the very few industries in America that has defied the pandemic to deliver strong growth in 2020.
Around 10-15% of global solar installations are put up in the US each year, but until the Section 201 tariffs went into place, only around 1% of those solar panels were made here. We now have more than 7 gigawatts of domestic solar panel production capacity, up from just 1GW in 2017 before the Section 201 tariffs were imposed on the importers.
By 2035, solar panels are expected to be as important as oil. Going from being reliant on OPEC to power our economy, to being reliant on Chinese solar panels would be a sad tale of epic proportions – and a national security concern.
It is crucial for US economic and strategic interests that we develop a healthy solar manufacturing industry. It pays well. And most of these facilities are in small towns and cities that need this kind of labor.
So far, it does not look like solar installers are making noise over Trump’s proclamation. There’s no importer rebellion brewing.
Last week, solar installation firm Sunrun completed its acquisition of Vivint in a deal valued at $3.2 billion. The company expressed high optimism about the future after that deal, and there was no mention of how tariffs are ruining their lives. Sunrun is doing fine.