Trump's 30% tariff on imported solar panels may cost jobs

Sammy Roth | USA TODAY

Show Caption Hide Caption President Trump slaps tariffs on solar panels In the biggest blow he’s dealt to the renewable energy industry yet, President Donald Trump decided on Monday to slap tariffs on imported solar panels.

The Trump administration slapped a 30% tax on imported solar panels Monday in a move that critics say could slow down a fast-growing industry and kill tens of thousands of domestic manufacturing jobs.

The administration's decision followed a trade case brought by two U.S. solar manufacturers. They contended that cheap solar equipment from China and other countries hurt their businesses. Trump had long promised to boost manufacturing jobs by cracking down on Chinese imports.

"The President’s action makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses," the U.S. Trade Representative, Robert Lighthizer, said in a statement announcing Trump's decision.

But the vast majority of the U.S. solar industry opposed an import tax, saying it would raise the price of solar power and undercut an industry that employs more than 260,000 people, according to the nonprofit Solar Foundation — more people than work in coal or natural gas, two energy sources favored by Trump. About half of U.S. solar jobs are in installation, with others in manufacturing, sales, product development and other sectors.

The Solar Energy Industries Association, a trade group, said Monday that Trump's decision will kill American manufacturing jobs, not create them. The trade group said that of the 38,000 solar manufacturing jobs in the U.S., only 2,000 involve making cells and panels, which are covered by Trump's import tax. The other 36,000 manufacturing jobs involve other equipment used on large solar farms and rooftop solar installations.

The trade group estimated the import tariff would eliminate 23,000 jobs this year.

"There’s no doubt this decision will hurt U.S. manufacturing, not help it," Bill Vietas, president of RBI Solar in Cincinnati, said in a statement released by the trade group. "Government tariffs will increase the cost of solar and depress demand, which will reduce the orders we're getting and cost manufacturing workers their jobs."

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The solar industry has been growing rapidly, fueled by dramatically falling costs and state and local policies to support clean energy. The U.S. installed nearly 15 gigawatts of solar power in 2016, according to the clean-tech consulting firm GTM Research, up from 2 gigawatts five years before and a tenth of a gigawatt a decade earlier. Huge solar farms have spread across the open desert in states like Arizona, California and Nevada, and rooftop solar systems have become increasingly popular for homes and businesses.

That growth was made possible by cheap imported solar panels, particularly from China.

"The role that imports have played...has been absolutely massive," said Ethan Zindler, head of U.S. policy analysis at Bloomberg New Energy Finance, a research firm. "It has allowed solar to be cost competitive on an unsubsidized basis in many parts of the world, and it has allowed zero-carbon generation to come online and supplant higher-carbon sources of energy in literally thousands of places around the world."

Zindler said Trump's import tax is less extreme than the companies that brought the trade case asked for, and less extreme than some members of the U.S. International Trade Commission had recommended. Imported solar cells and modules will be taxed at 30% at first, with the tariff dropping to 15% over the next few years. The initial 30% tariff will add about 10% to the costs of building a large solar farm, Zindler said —- big enough hit to kill some projects, he predicted, but not others.

The Trump administration also exempted the first 2.5 gigawatts of solar cell imports each year from the tax. On top of that, the Arizona-based company First Solar makes a type of panel that's not covered by the tariff. Between the exemption, the First Solar panels and projects already in the works, "it’s possible that in calendar year 2018, virtually none of the market would actually be affected by these tariffs," Zindler said.

GTM Research expects the tariffs to reduce solar installations by 10% to 15% through 2022, according to the firm's head of Americas research, M.J. Shiao. Experts don't expect the rooftop solar market to take much of a hit, since rooftop installations are more expensive than large solar farms and panel prices make up a smaller portion of the cost.

While Trump's solar decision is "better than the worst-case scenario, it is directionally terrible," said Adam Browning, executive director of the advocacy group Vote Solar.

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"In the fight against climate change, solar's increasingly low cost is the one glimmer of hope that we have, that we might actually continue to live in the climate that our species evolved in," Browning said. "We should be jamming the accelerator, not the breaks."

SolarWorld Americas, one of the two U.S. manufacturers who asked the Trump administration for tariffs, was cautiously optimistic about Monday's announcement.

"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," Juergen Stein, president of SolarWorld Americas, said in a statement. "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."

Trump's action to tax solar imports follows a push by Energy Secretary Rick Perry to subsidize coal-fired power plants, which are having trouble competing in an electricity marketplace dominated by cheap solar, wind and natural gas. Perry's plan was rejected by federal energy regulators, but the Trump administration has taken other steps to support fossil fuels, which climate scientists overwhelmingly agree are responsible for the warming of the planet's climate.

The Interior Department is working to open vast swaths of public lands and waters to oil and gas drilling, and the Environmental Protection Agency is rolling back Obama-era regulations designed to speed the replacement of fossil fuels with climate-friendly energy sources like solar and wind.