UPDATED: President Trump Approves 30% Solar Tariffs

Editor’s note: This article was updated on Jan. 23 to include clarifications from the USTR about country exclusions and additional information.

On Monday, the Trump administration revealed the highly anticipated – and, for many industry stakeholders, feared – determination on the Section 201 trade case launched by Suniva and SolarWorld Americas. Perhaps because President Donald Trump had been busy dealing with the government shutdown, however, U.S. Trade Representative (USTR) Robert Lighthizer made the initial announcement.

According to a press release from the USTR, Trump has approved applying import tariffs on crystalline silicon photovoltaic (CSPV) cells and modules starting at 30%, with an annual exemption for the first 2.5 GW of imported solar cells. In the release, Lighthizer notes the president has also signed off on tariffs for imported residential washing machines.

“These cases were filed by American businesses and thoroughly litigated at the International Trade Commission (ITC) over a period of several months,” says Lighthizer. “The ITC found that U.S. producers had been seriously injured by imports and made several recommendations to the president. Upon receiving these recommendations, my staff and I conducted an exhaustive process which included opportunities to brief in person and through public comments, public hearings, and meetings with senior representatives. Based on this information, the Trade Policy Committee developed recommendations, which the president has accepted. The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers, and businesses in this regard.”

Background

Trump’s solar trade decision comes slightly ahead of a Jan. 26 deadline and after nearly a year of heated campaigns from the two co-petitioners and major case opponent, the Solar Energy Industries Association (SEIA).

Last May, the ITC initiated an investigation after Georgia-based bankrupt manufacturer Suniva filed a Section 201 petition, and, facing troubles of its own, Oregon-based SolarWorld Americas later joined as a co-petitioner. The obscure Section 201 mechanism is unlike the previous SolarWorld-led U.S. trade actions against Chinese and Taiwanese solar imports, as it does not require a finding of unfair trade practices and applies globally, rather than to one specific country, unless a free-trade partner is exempted.

The co-petitioners have argued that Chinese-owned module suppliers set up shop in other markets to successfully avoid U.S. tariffs and that a continued glut of cheap imports into the U.S. makes it difficult for domestic module makers to compete. (Notably, SolarWorld has a German parent and Suniva is majority owned by a Chinese company, which opposed the Section 201 petition.) The co-petitioners claimed the imposition of an “effective remedy” would salvage the remaining U.S. manufacturing capacity and lead to the creation of over 100,000 jobs across all segments in the industry. Meanwhile, SEIA released its own report finding nearly the same number of jobs would be lost if Suniva got what it initially asked for.

In September, the ITC unanimously determined that imported CSPV cells and modules have caused, or threatened to cause, “serious injury” to the domestic CSPV manufacturing industry. The commissioners later made a variety of trade remedy recommendations, including quotas, tariffs up to 35%, and import licenses. The ITC also recommended that a number of U.S. free-trade partners, including Canada and Singapore, be excluded from any global trade actions.

In order to help Trump determine the “appropriate and feasible action to take” and perhaps ward off potential World Trade Organization (WTO) objections, Lighthizer requested a follow-up ITC report, which singled out China for “unforeseen developments” related to policies that created a “vast overcapacity” and a resultant surge of CSPV imports into the U.S.

According to analysts, the ITC’s recommended tariffs were much lower than what the co-petitioners originally sought and penciled out to between about $0.10/W and $0.12/W. Suniva and SolarWorld considered the proposal too weak and called for higher tariffs, and SEIA maintained that any new tariffs would greatly threaten the solar industry.

Under a Section 201 case, however, the president had the final say as to what, if any, trade actions to implement. Given the ITC’s unanimous ruling; Trump’s long history of wanting to be tough on trade, especially in regards to China; and the president’s “America First” policy platform, the decision to apply new tariffs on CSPV products is largely unsurprising.

Decision

For imports of CSPV solar cells and modules, Trump approved applying safeguard tariffs for the next four years (the length of time afforded under a Section 201 case) with the following terms:

UPDATED: President Trump Approves 30% Solar Tariffs
Chart courtesy of USTR

As the USTR explains, the trade relief will include a tariff of 30% in the first year, 25% in the second year, 20% in the third year, and 15% in the fourth year. Additionally, the first 2.5 GW of imported solar cells will be exempt from the safeguard tariff in each of those four years.

The 30% tariff is slightly lower than the highest recommended by one ITC commissioner, 35%, and much lower than the 50% tariff Suniva and SolarWorld had been calling for. An updated USTR fact sheet shows Trump ultimately denied the ITC’s recommendation to exclude Canada from the global tariffs, and the document verifies neighboring Mexico and major CSPV importer Korea will also be impacted.

In an emailed response to Solar Industry, a USTR spokesperson pointed out that the fact sheet says, “Consistent with our WTO obligations and our past practice, the United States is
excluding all Generalized System of Preferences (GSP) beneficiary countries” from the tariffs, save for Thailand and the Philippines.

“If they are not listed as an excluded country [in the fact sheet] or a GSP beneficiary (with two noted exceptions), then the global safeguard tariff applies,” the spokesperson wrote. The spokesperson did not provide clarification regarding Singapore, which the ITC had also recommended for exclusion but is not a listed GSP beneficiary.

According to its announcement, the USTR will also engage in discussions among interested parties that could lead to positive resolution of the separate antidumping and countervailing duty measures currently imposed on Chinese solar products and U.S. polysilicon. The goal of those discussions must be fair and sustainable trade throughout the whole solar energy value chain, which would benefit U.S. producers, workers, and consumers, the release says.

Reactions

Both co-petitioners have welcomed the decision, while the vast majority of other solar stakeholders have expressed disappointment and concerns.

“SolarWorld Americas appreciates the hard work of President Trump, the U.S. Trade Representative, and this administration in reaching today’s decision, and the president’s recognition of the importance of solar manufacturing to America’s economic and national security,” says Juergen Stein, CEO and president of SolarWorld Americas Inc. “We are still reviewing these remedies, and are hopeful they will be enough to address the import surge and to rebuild solar manufacturing in the United States. We will work with the U.S. government to implement these remedies, including future negotiations, in the strongest way possible to benefit solar manufacturing and its thousands of American workers to ensure that U.S. solar manufacturing is world-class competitive for the long term.”

In a separate statement, Suniva says, “On behalf of Suniva’s employees and the thousands of American solar manufacturing workers significantly harmed by unfair trade practices, we thank President Trump for holding China and its proxies accountable, imposing necessary tariffs, and closing the threatened Canadian loophole.

“Over the last five years, nearly 30 American solar manufacturers collapsed; today, the president is sending a message that American innovation and manufacturing will not be bullied out of existence without a fight,” Suniva continues. “We look forward to working with the administration as these tariffs go into effect and beginning global settlement negotiations. This is a step forward for this high-tech solar manufacturing industry we pioneered right here in America.”

SEIA, on the other hand, calls Trump’s decision a “loss for America.”

“While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs,” says Abigail Ross Hopper, SEIA’s president and CEO.

SEIA also argues the decision will have far-reaching impacts across all sectors of the solar industry, including the loss of about 23,000 U.S. jobs this year.

“There’s no doubt this decision will hurt U.S. manufacturing, not help it,” says Bill Vietas, president of mounting provider RBI Solar.

Tony Clifford, chief development officer of installer Standard Solar, says, “It boggles my mind that this president – any president, really – would voluntarily choose to damage one of the fastest-growing segments of our economy. This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries of an American taxpayer bailout.”

“This is a bad day for the U.S.,” states Costa Nicolaou, president and CEO of racking company PanelClaw. “What’s most disappointing is that the president sided with two foreign-owned companies and didn’t listen to Americans from across the country and political spectrum who understood tariffs will cause great economic pain for so many families in the solar sector.”

SEIA points out that, despite the likely negative impacts of the decision, the tariffs were “nowhere near as bad” as what the co-petitioners sought. The group also says it also looks forward to working with interested parties to achieve a positive outcome in the existing antidumping and countervailing duty cases.

“While we believe the decision will be significantly harmful to our industry and the economy, we appreciate that the president and the administration listened to our arguments,” says Hopper. “Our industry will emerge from this. The case for solar energy is just too strong to be held down for long, but the severe near-term impacts of these tariffs are unfortunate and avoidable.”

According to Morten Lund, solar energy partner at law firm Stoel Rives, Section 201 statute dictates that implementation is 15 days from the transmission of the president’s decision to Congress. Lund says that means implementation could be as early as Feb. 6, although it could be delayed for a number of reasons, such as the government shutdown, and could be subject to congressional revisions regarding free-trade partner exemptions.

More industry reactions are available here, and a prediction of how the tariffs will affect U.S. solar installations is available here.

9 COMMENTS

  1. I own a small solar PV design and installation company. The only modules I’ve ever installed that literally came apart were Suniva’s. I used to install SolarWorld as well, but after their participation in this ITC case, I PROMISE THAT I NEVER WILL AGAIN. That is, of course, if my small company can survive what this will do to the cost of projects.

  2. In Brazil it is even worse, for an inverter and modules it will more than double the final price, and know incentives for local industries ! By the way I own a small solar installation company !

  3. I own a small company in CA. We mainly install LG Solar. A top dollar brand name imported panel. They will be hit hardest being at the top end of the price spectrum.

  4. Can someone fill me in on why this is not welcome news by the US solar industry?

    In the past, Chinese modules we’re considered inferior products. They were mass produced, with little quality management and Chinese CSPV companies reinvested minimally in their R&D. The market was flooded with inexpensive Chinese solar modules that premium integrators dismissed as “junk.”

    The global CSPV market suffered from Chinese modules and US manufacturers’ ability to compete dwindled. The US solar industry suffered too, because the Chinese low quality CSPV products blemished the entire industry’s reputation.

    The long-term benefits of protecting American CSPV manufacturers with foreign tariffs include: competing on quality, employ American workers, bolstering the US economy and growing the industry through R&D. These positive aspects outweigh the short-term “gains” of delivering cheap, solar arrays, of poor quality, to US consumers. This tariff will protect responsible US solar manufacturers that reinvest in TQM and put out high-end, quality products.

    “What about the small guys…the installers/integrators?” you ask. Fair question. My advice to them is focus on better marketing. Educate customers about the history of HIGH QUALITY U.S. MANUFACTURED PRODUCTS, vs. Chinese modules. Steer sales and marketing resources towards serving a higher educated more socioeconomically affluent demographic. Use resources available (Google them, they’re all over the internet) to target viable consumers based on research pertaining to local markets served. Foster business relationships with US manufacturers that are similarly committed to quality. Together, forge ahead of the competition. Promote your company as the benchmark provider of the highest quality installations available in your market. Sell the peace of mind benefits, to your customers, that your arrays are manufactured by leading US companies and that the difference is, better quality. Excite your sales team to get out there and be motivated to offer US products, craftsmanship backed by strong warranties and the value of that peace of mind in any solar array investment. Express that you’re proud to be part of a movement that is committed to sustainable, renewable energy and using nothing but the highest quality solar photovoltaic products on the market. Emphasize the best CSPV’s are produced and backed by US manufacturers, and how your customers appreciate and value that they can boast their solar array is a high quality product from a US company, installed by a certified partner (you and your company) after earning that distinction following an in-depth examination of your skills, processes and procedures. Drive home that your customers are end-user energy partner’s that share the same pride and benefits of knowing their solar arrays are result of the highest standards in the industry.

    In the short run, some shake-ups will undoubtedly occur. Over time, players in the industry will come and go but, in the end, these tariffs will prove positive for the US economy, US CSPV manufacturers, US consumers and integrators, as a whole.

  5. This is a complex topic. I am in the solar industry and it is a good and bad thing at the same time. The Chinese are cornering the market of solar components by overly subsidizing the manufacturing in China. This had the effect that all manufacturing jobs in the USA were lost or under severe stress. One in ten jobs in solar is in manufacturing. The companies in the USA that sell systems love low cost parts, however it is short sighted. We do not want another OPEC that controls the cost of energy, furthermore Chinese products generally are inferior to US made parts in the solar industry and long life is important from an investment point of view. This is not Trumps idea, he is only a decision maker. This was initiated by solar manufacturing companies as a last resort…. The cost will amount to less than 5% at the system level, you get a made in USA product that is better, supports local manufacturing jobs, and you need to wait a few months longer to have the system pay for itself. I have US made products on my house and gladly paid a small amount more.

  6. I agree with Mark G above – American manufactures deserve the right to compete on a fair playing field. Do the research many of China’s manufactures are running 80% debt to equity ratios and with out the help of their government would have gone bankrupt years ago. The US companies faced with the same issues have gone bankrupt – the ones that are left are quality organizations and have earned the right for a fair playing field. This policy of the Chinese has led to a Module glut causing unsustainable low prices.

    I am a small system installer and it may hurt a little bit in the short run, but i feel that this is required to ensure we have a strong US based manufacturing arm. How many of you are old enough to remember the made in Japan dumping of the 80’s – when when American manufacturers of TV’s, VCR’s, Stereos etc like Westinghouse, and GE where pushed out of the market by cheap imports, never to return.

    I believe there is a lot of fear, uncertainty and doubt out there and as an industry we will survive this one and with it bring along a US manufacturing arm that has the opportunity to thrive!

  7. Having spent over 20 years in the photovoltaic industry, both the module manufacturing sector & systems business I am particularly appreciative that President Trump is taking a positive stand in support of U.S. made PV products.
    We must control our borders and not accept the inferior imported JUNK.
    Congratulations Mr. President, continue with your the good work.

  8. One of the products that I was responsible of development & introduction was the “SUNXTENDER”, AGM Storage Battery designed for the Photovoltaic and Alternate Energy (PV, Wind, etc.) industry.
    It is manufactured by CONCORDE BATTERY CORP., with headquarters in West Covina, CA.
    The SUNXTENDER product has had tremendous success for outstanding performance both here in the US and worldwide.

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