Interestingly, Tesla stands to gain from this decision.
Posted By: Megan Geuss
On Monday afternoon, the Trump administration released a fact sheet (PDF) detailing new tariffs on imports, including a tariff schedule for solar cells and modules starting at 30 percent.
The solar tariff determination had been tensely anticipated by the US solar industry, with manufacturers arguing that cheap imports from Asia have harmed their businesses. Solar installers, financiers, and sales people, however, argue that cheap imports have created a bigger boom in employment than manufacturing ever could.
The news is likely a blow to the wider solar industry, although it’s not entirely unexpected. Trump has been vocal about his preference for tariffs and has shown little desire to extend a hand out to the solar industry, which is often seen as a competitor with fossil fuels. When the International Trade Commission (ITC) voted in favor of imposing tariffs on solar imports in September, the trade association Solar Energy Industries of America (SEIA) prepared for the worst.
This new determination sets tariffs on imported solar cells and modules at 30 percent with a gradual decrease of that tariff over the subsequent four years. In years two, three, and four, the tariff will be imposed at 25 percent, 20 percent, and 15 percent, respectively, of the value of the import. The first 2.5 gigawatts of imported solar cells imported are exempt from the tariff (but it seems that a similar provision was not made for solar modules).
Though the executive branch has broad authority to impose whatever tariff it wants after the ITC finds that an industry has been harmed by imports, this tariff decision closely matches the middle-ground recommendation made by two of the four-person ITC’s commissioners. Those commissioners recommended a 30-percent tariff on modules and a 30-percent tariff on imported solar cells in excess of 1GW, with declining rates after the first year.
The more aggressive recommendation that the ITC made in November included a “35-percent tariff on all imported solar modules, as well as a four-year tariff of 30 percent on solar cell imports exceeding 0.5 gigawatts and a 10-percent tariff on cell imports under that limit.”
The Trump Administration may have shied away from backing the more aggressive tariff schedule because every similar trade decision thus far has been challenged at the World Trade Organization (WTO) and lost.
In a memo ostensibly to meet those future objections, the ITC released a report in January saying that domestic manufacturers could not have foreseen the changes in trade that caused their businesses to falter.
If the tariff stands, it could reduce the cost-effectiveness of solar for many planned installations. Recently, bids for solar energy development in Colorado came in extraordinarily low. But with this decision, some of those bids will have to be revised upwards.
In a statement, the SEIA said “The decision effectively will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing, and it will result in the delay or cancellation of billions of dollars in solar investments.”
Suniva, the solar manufacturer that brought the case to the ITC, is 63-percent owned by a Chinese firm and declared bankruptcy in early 2017. SolarWorld Americas, a manufacturer owned by German firm SolarWorld, joined Suniva in front of the ITC as well. Ars has asked SolarWorld Americas for comment on the new tariff decision and will update when we receive a response.
Interestingly, one of the domestic manufacturers poised to take the most advantage of this decision is Tesla, which bought SolarCity and its brand-new solar panel factory in Buffalo, New York, in 2016. Tesla recently announced that the Buffalo factory, called Gigafactory 2, had begun making traditional solar panels and solar roof tiles over the past several months.
Although the Buffalo factory currently only produces tiles and modules and imports solar cells, the factory plans to eventually manufacture its own cells. In a statement, a Tesla spokesperson said, “Tesla is committed to expanding its domestic manufacturing, including Gigafactory 2 in Buffalo, New York, regardless of the solar tariff decision today.”