The United States, the European Union and India are all slapping tariffs on Chinese solar panels, accusing Beijing of dumping. Does this trade war risk killing the nascent solar power industry?The global solar industry is reeling this week following the Trump administration’s announcement that it will impose a 30 percent tariff on imported solar panels, mainly from China.
The US Solar Industries Association said this will result in the delay or cancellation of billions of dollars in solar investments, and the loss of 23,000 US jobs this year.
Despite the dramatic predictions, the solar industry likely knew the announcement was coming. The European Union has set roughly equivalent tariffs on imported Chinese panels, which were renewed in September 2017.
Another indication was how earlier this week, India set a whopping 70 percent import duty on Chinese and Malaysian solar panels.
Brussels, Delhi and Washington all allege that China has been “dumping” the panels on their markets — selling them at artificially low prices and taking a loss in the short term in order to kill competitors in rival markets.
SolarWorld Americas, the largest US solar panel manufacturer, first called for the US to impose such tariffs three years ago. The move fits with US President Donald Trump’s protectionist promises.
But other parts of the US solar industry have been pleading with the administration to not follow Europe’s lead, saying it would cripple their young but fast-growing businesses. They convinced a bipartisan group of 16 US Senators and 53 House members to write to Trump last year asking him not to impose the tariffs.
The US has set such tariffs before, in 2014, but ran afoul of World Trade Organization rules. South Korea has said in will likely challenge these new tariffs with the WTO.
While US and European solar panel manufacturers have said the tariffs are necessary to make a level playing field, solar installers, generators and users say thanks to the tariffs, those manufacturers may not have any customers left.
“While tariffs in this case will not create adequate cell or module manufacturing to meet US demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving,” said Abigail Ross Hopper, president of the Solar Industries Association. This “will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs,” she added.
She predicted that the tariffs could cut forecast solar installations this year by nearly 20 percent, to 9 gigawatts from 11 gigawatts. “It’s just basic economics: If you raise the price of a product, it’s going to decrease demand for that product.”
US solar companies have pointed to the experience of their counterparts in Europe, where anti-dumping duties have been in place on Chinese solar panels since 2013. The industry association SolarPower Europe has said the EU tariffs have added at least €500 ($622) to the cost of a household installation.
“These policies have been tried in many parts of the world, and in not one case have the measures lead to more jobs, more manufacturing and more value,” said James Watson, SolarPower Europe’s CEO. “In essence, trade measures are a blunt tool with many unforeseen consequences on solar manufacturers of other crucial elements of the value chain.”
Trade trumps environment
The US is the world’s fourth-largest solar market after China, Japan and Germany. Zvi Schreiber, CEO of online freight marketplace Freightos, noted that the tariff is going to cause disruption in global trade patterns for these products — which could have the effect of shutting down new solar projects around the world.
“There will be shifts in demand,” he told DW. “It’s not just the solar panels themselves — today any product they manufacture includes dozens if not hundreds of materials.”
Even if the playing field isn’t level at the moment, Schreiber questions whether Washington and Brussels are cutting off their nose to spite their face, risking killing off an industry that does environmental good in the name of free trade — and risking a trade war with China in the process.
“Of course, the big loser is the environment,” he said. “If China is willing to subsidize solar panels, we should all say ‘thank you very much,’ because that’s going to help our planet — which is more important than whether it’s fair.”
“ThaIt’s something that benefits all of us.”