The U.S. Commerce Department on Thursday levied hefty tariffs on Chinese solar panels imported to the United States, raising concern that resulting higher costs will stunt strong growth in the U.S. solar market.
The tariffs of just over 31 percent are meant to offset Chinese prices that the government found were “dumped” on the U.S. market at below market value. Chinese manufacturers had seized the lion’s share of the U.S. market, but most in the American industry opposed tariffs as a threat to growing employment from installation work. The Solar Foundation estimated last year that U.S. employment in the sector grew 7 percent last year, topping 100,000.
Thursday’s tariffs, which are subject to review, are in addition to antisubsidy tariffs of 2.9 to 4.73 percent set in March.
Those low figures were viewed with cautious relief at the time. But RMI’s Ned Harvey noted then: “This is an industry where, at least for the foreseeable future, market growth is driven by cost reduction. Unfortunately for everyone downstream of the module manufacturers, the ‘step’ increase in module costs resulting from tariffs represents an immediate hit to the industry’s already-slim margins. More importantly, if the higher costs are passed on to consumers, it threatens to put an unwelcome brake on the potential for continued demand growth.”
Thursday’s decision, then, was even more disappointing.
However, RMI solar analyst Jesse Morris notes that it remains to be seen how much the tariffs on Chinese manufacturers will actually impact consumers. Some industry participants believe that any increased costs will be absorbed throughout the increasingly competitive solar supply chain and insulate end users from cost increases. Other analysts have also pointed out how many China-based manufacturers will simply avoid the tariffs by moving their goods through countries like Taiwan enroute to the U.S. RMI is working to accelerate deployment of photovoltaic solar across the U.S. by working with industry partners to decrease non-module ("balance of system") costs and finding ways to increase investor confidence, among other steps. The Institute’s hope is that the tariffs will force the global industry to be more efficient and innovative. We’ll write more about that on the Outlet next week.