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Buyers brace as Trump slaps tariffs on solar imports

New fees are likely to drive up development costs in states with lower conventional utility rates.

True to the solar industry’s fears, President Donald Trump late Monday imposed tariffs of 30 percent on imported solar cells and panels.

The Solar Energy Industries Association (SEIA) had lobbied long and hard against the tariffs, from the day last April when Georgia-based solar-panel maker Suniva, fresh from filing for bankruptcy, filed a trade complaint with the Trump administration seeking protection from cheap imports.

The solar trade group is worried that the steep tariffs will drive up development prices, making solar energy uncompetitive in states with lower conventional utility rates and has predicted that billions of dollars of solar investments could be delayed or canceled, and the U.S. solar industry could lose 9 percent of its roughly 260,000 jobs. 

The tariffs "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," said Abigail Ross Hopper, SEIA's president and CEO, after the decision.

Corporate renewable energy buyers swiftly criticized the tariffs.

"The president's decision to impose 30 percent tariffs on imported solar cells and modules will have the unfortunate consequence of raising costs for downstream solar customers, including the growing number of leading companies that are sourcing their electricity from renewable resources," said Malcolm Woolf, a senior vice president at Advanced Energy Economy and representative of the Advanced Energy Buyers Group. The organization's members include corporations such as Apple, Google, Walmart and Facebook that procure considerable amounts of solar, wind and other clean power to meet their corporate carbon emissions reduction targets.

The president's decision to impose 30 percent tariffs on imported solar cells and modules will have the unfortunate consequence of raising costs for solar customers, including leading companies.
Woolf added that higher prices will "slow the growth of solar," because to corporate buyers, "price matters."

While many trade groups and analysts agreed that the tariffs are unlikely to boost  U.S. solar panel manufacturing, they disagreed on the extent to which the duties wil hurt the U.S. solar market. 

The solar tariffs are likely to push up U.S. solar-panel prices and squeeze solar-company profit margins, which would hurt individual players, but they are unlikely to severely damage the overall U.S. solar market, said Paula Mints, founder and chief market research analyst at SPV Market Research. That's because big utilities, cities and other buyers are likely to proceed with plans to invest in and build out more solar and wind power.

"There’s momentum in the U.S. market and it's not going away," she added. "It's going to affect individual players, and some deals may not be made, but the market is not going to crash."

There’s momentum in the U.S. market and it's not going away.
The first 2,500 megawatts of imported solar cells — devices made of silicon that convert sunlight into electricity — won't be subject to the tariffs. But  imports beyond that amount will be subject to 30 percent duties in the first year, 25 percent in the second year, 20 percent in the third year and 15 percent in the fourth year, according to a fact sheet issued by U.S. Trade Representative Robert Lighthizer. The countries immediately subject to the tariffs are Canada, Mexico, South Korea, Thailand and the Philippines. Those countries, and China, were named in the fact sheet. It was unclear whether other countries also would be subject to the tariffs.

Lighthizer blamed China for inundating the United States with "artificially low-priced solar cells and modules," and concluded that China supplies 60 percent of the world's solar cells and 71 percent of solar modules.

China supplies 60 percent of the world’s solar cells and 71 percent of solar modules.
"China's industrial planning has included a focus on increasing Chinese capacity and production of solar cells and modules, using state incentives, subsidies and tariffs to dominate the global supply chain," he added.

According to the fact sheet, "China's share of global solar cell production skyrocketed from 7 percent in 2005 to 61 percent in 2012. China now dominates global supply chain capacity, accounting for nearly 70 percent of total planned global capacity expansions announced in the first half of 2017."

Lighthizer said in a separate statement that he would hold talks "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." He noted that that the 40 percent tariffs imposed during the Obama administration on Chinese solar imports prompted Chinese manufacturers to simply move production to other countries so they could avoid the tariffs, while maintaining their capacity.

Imported panels made by First Solar at its Malaysia factories are not subject to the tariffs. Shares of First Solar were up nearly 7 percent in after-hours trading late Monday, at $73.70, on expectations that the tariffs will give the Arizona-based company a leg up on foreign rivals.

Suniva and SolarWorld, which operates a solar-panel factory in Oregon and joined Suniva's trade complaint, argued that below-market prices charged by solar-panel makers in China and in other countries such as Malaysia and Thailand, where Chinese investors branched out after the Obama administration imposed tariffs on Chinese panels, were pushing them into or toward insolvency. If U.S. manufacturers could get a four-year reprieve from the onslaught of cheap imports, they could get back on their feet, rehire laid-off workers and figure out how to compete, the companies said.

The Trump administration also issued new duties on imported clothes washers, setting a 20 percent tariff on the first 1.2 million imported washers and 50 percent tariffs on any others beyond that number, and dropping over three years to 16 percent tariffs on the first 1.2 million imports and tariffs of 40 percent on all others that year.

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