Are Tariffs of 31% on Solar Cells Imported from China Good or Bad for the U.S.?
It depends on who you ask, whether the decision of the U.S. Department of Commerce to impose tariffs of approximately 31% on the import of Chinese solar cells is going to be a good or a bad thing for the U.S. Many worry that our solar jobs will be lost if this pronouncement is made official, as expected; and that some of the progress made in the solar industry spurred on by Chinese solar cells flooding the market and lowering prices will be slowed. The other side of the coin is that U.S. manufacturers of solar panels will be on a competitive field that’s more fair and balanced; although costs of solar panels may rise now, the long-term benefit to North America may outweigh the temporary bump in along the road to solar parity. Increased domestic demand should allow more efficiencies of scale for U.S. manufacturers and as they grow production capability a leveling out of prices is expected.
This entire complicated discussion revolves around accusations made by several solar panel manufacturers in the U.S.A. that China is guilty of illegally dumping underpriced solar panels into America’s market.
Another valid point to this argument is that China’s unfair trade policies really do put domestic manufacturers at a distinct disadvantage. The Alliance for American Manufacturing (AAM) has been consistent with efforts to hold China accountable for every instance in which products are dumped into the U.S. market by subsidizing production, which is a violation of trade agreements.
Benefiting from the cheap solar panels from China has been a boon to the solar industry, but is the compromise worth it? Some would say yes! Transitioning from energy supplied by dirty fossil fuels to clean energy has been an uphill climb all the way, arguably because of the powerful influence on Washington of the oil-based industries. This window of opportunity supplied by inexpensive Chinese panels to push solar progress along in the U.S.A. has borne much fruit.
If these tariffs are imposed on China, retaliation is expected to affect other markets, such as polysilicon exports. In fact, most points of view on this matter make a strong argument that Washington should not rush into a validation of the accusation that Chinese manufacturers of solar panels are indeed guilty of dumping low-priced solar panels into our market. The possible backlash could very well affect America’s already dismal unemployment numbers.
Experts have already determined that China can take various strategies in order to bypass import tariffs. They can set up cell manufacturing plants in other countries, such as Taiwan or Mexico. They can also, for instance, use Taiwan-based suppliers to create cells rather than just wafers and then assemble the solar modules in China. It’s estimated that tolling cells to the firms in Taiwan would increase the cost for China by 6% to 12%, which is a far less damaging hit than the new U.S. tariffs. But even if China takes this type of strategy, chances are they will also impose retaliatory actions which harm U.S. jobs.
The verdict on this decision is still out and the end result of the tariff is yet to be determined. Forces on both sides of the argument have valid concerns. One thing is for sure – as the price of fossil-fuel based energy increases, the appeal of alternative sources like solar energy is sure to increase too. We all remember how much those big, flat-screen tv’s cost just a few years ago and now the costs have decreased because of increased demand. At NASS, we believe that consumer demand for cleaner energy solutions like solar power will continue to drive the increase in roof top solar installations.