Trump Solar Tariffs — Evil, But Not As Evil As They Could Be

The United States has announced import tariffs of 30% will apply to all imported solar panels but a yearly quota of 2.5 gigawatts of imported solar cells, or enough to make around 9 million panels, is allowed.  Just how much the United State’s Figurehead in Chief, Donald Trump, had to do with this decision I don’t know, but when you vote in someone who is only good for being blamed you may as well get as much mileage out of that as possible. So they will be forevermore known as the Trump solar tariffs and that’s definitely what they’re being called in the news.

But the reports I’ve seen don’t mention that US solar tariffs are not a new thing.  It’s just the previous ones mostly targeted China.  The last 3 main rounds of US solar import tariffs have gone like this:

  • 2012: Screw China
  • 2014: Screw China more and screw Taiwan
  • 2018: Screw the world

Making the Trump solar tariffs apply to the entire world is a huge change, but still a logical progression since China has been investing in manufacturing capacity in other countries to get around US tariffs.  So it’s a bit of luck for Chinese companies that have built factories in the United States and despite being part of the NAFTA free trade region the new tariffs apparently apply to panels produced in Mexico and Canada1.

The news reports also generally skip the fact that the Trump tariffs aren’t as bad as most people in the industry were expecting.  While a tariff of 30% that applies to the whole world is, by any reasonable measure, a bloody big tariff, I was surprised by how rapidly they phase out:

Rapid Phase Out

The Trump Tariffs’ rapid phase out. (Image source: The Goddamned United States Government.)

But note these are additional to existing duties.  They don’t replace them and then phase out. So Donald Trump is still hurting the solar industry, he’s just not hurting it as much as expected.  He’s breaking an arm rather than ripping it off and eating it.  But it’s still going to have a nasty effect on the US utility scale solar and residential solar industries.  Rooftop solar in the US already suffers from ridiculous amounts of red tape. That is regulation I don’t expect regulation hating Donald Trump to do anything about anytime soon.

Because the Trump tariff is not as bad as it could have been, we may see a fall in solar panel prices here in Australia in the short term, but overall it will slow the rate at which the cost of solar falls by reducing demand2.  But for now there will still be plenty of panel manufacturers looking for markets other than the US and so I’m only expecting downward pressure on prices.

The US says the Trump tariffs are to stop dumping, but when you have to apply anti-dumping tariffs to the entire world, perhaps it is time to consider that just maybe solar panels actually are cheap?  If they want to protect the US solar industry it is possible to do that through other means than tariffs without violating World Trade Organization rules.

A Trumped Up History Of US Solar Import Tariffs

In 2012 the United States said:

“Our solar panels are the best.  They’re the greatest.  We have all the best solar panels.  But China’s solar panels, they’re too cheap.  They’re just too cheap.  They should be more expensive like ours.  China keeps selling cheap solar panels that Americans want to buy and we’re not going to stand for it anymore!  From now on it’s America first!  I’m going to build a wall of anti-dumping tariffs and I’m going to make the US solar installation industry pay for it.  I’m putting a tariff of 31% to 250% on Chinese solar cells and panels which will come to a total of around 34% to 255%.  But Taiwan, you’re great.  We love you.  You have all the best solar cells, so no tariff for you.”

Maybe America didn’t actually sound like that back in 2012 but some things are just so awesome they become retroactive.  To the rest of the world, Trump speak is now the official voice of America and will remain that way for a very long time.  In 2053 when robo-president Lincoln makes its inaugural address thanking the voting machines that put it in power, I’ll be translating its ones and zeros into Trump speak in my head.

The 2012 solar tariffs did not apply to panels made in China from cells produced in other countries.  As a result, Chinese companies invested in solar cell manufacturing capacity in Taiwan.  So in 2014 the United States said:

“Screw you Taiwan!  Your solar industry is dead to me!  Dead, do you hear?  You keep buying American silicon and turning it into solar cells and we’re not going to stand for it anymore!  From now on it’s America first!  We are building a tariff wall of 11% to 28% on your solar cells and tariffs on Chinese solar panels will now be 54% to 128% no matter where their cells came from.”

As all panels produced in China now faced import tariffs, Chinese companies started building manufacturing capacity in other countries to avoid them.  As a result, countries across Asia started exporting panels to the United States at prices that were too low for them.  So this year, a year in which the official voice of America really is Donald Trump’s, the nation said:

“Free trade can be wonderful if you have smart people, but we have people that are stupid3.  I would build a great wall and nobody builds walls better than me, believe me4.  I’m going to build an extra tariff wall around the entire world to keep out cheap solar panels.  And it’s going to totally mess with them.  They’ll be so angry.  China, Korea, India, they can have all the solar panels they want.  They can have a big solar panel cake walk right through the middle of Tiananmen Square and it won’t make a lick of difference.  You know why?  Because I’m going to make America great again!”

Has The US Been Dumped On By China?

The reason why the US applied tariffs to Chinese solar panels has always been because they claim China has been dumping on them.  This means they been sold at a lower price overseas than in China.  This does appear to have occurred, but it’s nothing to get too excited about.  Trust me, it’s not at all unusual for costs to get padded in China.  If you think things are bad in Australia, they could teach you a thing or two or infinity in Shanghai.  But hurting your own solar installation industry because another country is as corrupt as the Devil’s Parliament is not an intelligent thing to do.

My personal opinion is that whenever someone sells you something you want at a low price the correct response is to say “thank you”.  And if the thing they are selling helps save lives by reducing global warming then I think the correct response is to give them a fucking medal.

I do think workers should be protected from the effects of dumping, but that can be done while preserving the benefits of having low cost goods supplied by another country.  My impression is that anti-dumping tariffs are often more about protecting investors than protecting workers and I think investors should be willing to take their chances.  After all, if you can’t lose it’s no fun anymore.  The current Trump tariffs are protecting investments Chinese solar companies made in North America.

US Silicon Manufacturers May Have Influenced The Trump Tariffs

Monosilicon is used in roughly half the world’s solar panels and the United States makes a lot of it.  The US silicon industry is against solar tariffs because the more solar that is installed the better it is for them.  It takes a lot of electricity to make monosilicon and electricity is cheap in the US and will stay cheap thanks to renewable energy.  So they see themselves making a lot of money in a world where the solar industry is free to expand.  I suspect they are why the Trump tariffs are not as bad as they could have been

Panel Manufacturing Has Changed

Seven years ago solar panel manufacture was labour intensive and required a large pool of skilled and compliant low wage workers.  At the time, this made China almost perfect for solar panel manufacture.  But times have changed and now new solar panel manufacturing lines are mostly automated and chock full of robots.  Because of the high level of precision required, humans do very little hands on work.  This means the United States isn’t as lousy a location to build solar panels as it was and so new manufacturing capacity there may offset at least a portion of the harm of the Trump tariffs.

Tesla’s solar panel factory in Buffalo in New York State will be the the largest in the US with one gigawatt of capacity but, as hard as it may be to believe, Tesla is behind schedule on this.

Will Solar Prices Fall In Australia?

Because the Trump tariffs weren’t as bad as many were expecting, solar panel sales to the United States will probably be stronger than expected which may mean slightly higher prices than would otherwise be the case.  But there is a huge stockpile of solar panels sitting in America that was built up in expectation of much higher import tariffs.  This mountain of modules is now going to be sold off faster than expected, so we may see a temporary dip in solar panel prices in Australia.

Could Definitely Be Better But Could Be Much Worse

You’d think what with all the hurricanes smashing into US cities and arctic winds blowing all the way down to Florida, Americans  would be more gung-ho about expanding solar generation.  But considering the current US President has stated global warming is a Chinese hoax and wants to revitalize coal mining, I think we’ve been lucky that the Trump tariffs are only short term.  The fact they’re not as bad as they could be actually makes me suspect there are some people in the US government who want to find out what is best for their country and then do it and not just do what they assume is best for their country without checking first.

But I am afraid there is no guarantee Trump won’t be an arsehole and do something to derail renewable energy just because he can, as when he declared the US was leaving the Paris Agreement.  After all, being an arsehole is why 48% of Americans voted him in.

Footnotes

  1. Countries listed in order of similarity to Queensland.
  2. Higher demand leads to more investment in solar manufacturing which leads to lower prices in the long term.
  3. Actual Trump quote.
  4. Actual Trump quote.  I could string string direct Trump quotes together to make this entire section, and while it would amuse me and would hopefully amuse you, I unfortunately want to get this article out while it is still topical.
About Ronald Brakels

Many years ago now, Ronald Brakels was born in Toowoomba. He first rose to international prominence when his township took up a collection to send him to Japan, which was the furthest they could manage with the money they raised. He became passionately interested in environmental matters upon his return to Australia when the local Mayor met him at the airport and explained it was far too dangerous for him to return to Toowoomba on account of climate change and mutant attack goats. Ronald then moved to a property in the Adelaide Hills where he now lives with his horse, Tonto 23.

Comments

  1. Ronald what about Florida where the utility company has convinced the state government to stop solar panels being installed

    • Ronald Brakels says

      What? In Florida you can buy a handgun and carry it around with you concealed. But you’re not allowed to have solar panels? Sounds like they got their priorities a bit wrong there. Have they suffered a terrible spate of solar panel murders or something? Or did they just hear that solar panels produce DC current and they totally hate Washington DC?

      But looking it up, it appears solar panel installations aren’t banned in Florida, so that is something. America isn’t quite as nutty as we think it is.

      But, I recently found out that the US still has get out of jail free cards police officers can hand out to friends and family like in the Untouchables movie, so yeah, America’s still a weird place.

  2. Tony Jacques says

    A loud-mouth dictator will scream “tariff, tariff” so that he might appear BIG in the eyes of his electorate. But in reality the tariffs will be imposed on items seen as totally unimportant in real terms. This is the scary bit. That Trump should be imposing tariffs on solar panels because he doesn’t see them as important in the US economy. Next it’ll be buggy-whips that’ll cop the tariff. Accompanied by even louder MAGA.

  3. Gabriel Bradly says

    “If you can’t lose it’s no fun anymore”. Great line. Profound too. Demand for solar has really ramped up since the tariff announcement. I suspect people who were in the fence have now decided to buy before the tariff free initial allowance has been exhausted.

  4. Silly man.
    is he really protecting any USA industries?
    can the USA compete with China ?
    C’mon , here is a little history lesson on tariffs.
    The garlic wars.
    A Chinese company was taken to court by a number of farmers in the USa claiming they were dumping garlic.
    They won the case but later it was reversed.
    Turns out the USA banned garlic imports from China.
    What did China do ?
    They shipped to Indonesia, Malaysia and Singapore and beat the ban.
    Turns out an American company was the sole importer of one large Chinese garlic companies produce into the USA.
    A Chinese farmer in the USA could not work out why he could not compete with the garlic imports from China.
    Note here that the largest consumed garlic in the USA is peeled and packaged garlic.
    What did he do?
    he went to China on friends advice and found the garlic was being shelled and packed by prison inmates.
    he took his video evidence into the courts in the USA to have the imports banned.he won his case, but low and behold a couple of years later the decision was over turned after the large importer in the USA appealed the decision.
    Trump is on a beating to nothing over Chinese low cost imports.
    The only person to be hurt will be the American consumer .
    The Chinese aren’t stupid and they will find a way around this .

  5. When the pressure is on in China, cheaper materials will be utilised, corners will be cut, quality will suffer, solar electricity cost saving will not be realised and manufactures will close up rendering warranty statements useless. Let’s keep Australia beautiful.

  6. Hi,

    “They’ll be so angry. China, Korea, India, they can have all the solar panels they want. They can have a big solar panel cake walk right through the middle of Tiananmen Square and it won’t make a lick of difference. You know why? Because I’m going to make America great again!”

    Big Dennis Leary fan? A55hole Song?

    Good article.

    Keep it up.

    dRdoS7.

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