A recent decision by the US International Trade Commission (USITC) in favor of two solar manufacturers means that new tariffs on solar cells and panels could be coming. As the reactions from companies and organizations across the economy—and across the political spectrum—make clear, that’s bad news for just about everyone, including you and me.
The solar tariff case
The case was brought by Suniva and SolarWorld Americas, two foreign-owned US manufacturing operations that had hit rocky patches in recent years. The companies applied to the USITC under Section 201 of the Trade Act of 1974, which basically says that “domestic industries seriously injured or threatened with serious injury by increased imports” can ask the USITC for “import relief.”
That might seem like a pretty low bar—competition is never easy, whether it’s domestic or foreign, and some of that competition could indeed be serious—but Section 201 has been used only once in the 21st century (in 2002, in a short-lived attempt to protect the steel industry, but one that would have harmed consumers and destroyed more jobs than it created because of the impact of the higher steel prices).
It’s not lost on anybody, though, that this latest petition comes at a time when we have a president who is no friend of trade, and is hungry for tariffs.
The relief that the two petitioners are asking for—sizeable new tariffs on both solar modules, and the cells that manufacturers (yes, US manufacturers) might assemble into modules—would put a definite dent in solar’s incredible momentum in recent years. More importantly, for a president who professes to be about jobs, it would be very likely, as with the 2002 case, kill more jobs than it saved or created.
Even so, on September 22, the bipartisan USITC voted 4-0 in favor of the petition, determining:
…that increased imports of crystalline silicon photovoltaic cells (whether or not partially or fully assembled into other products) are being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry producing an article like or directly competitive with the imported article.
How do I love thee not? Let me count the ways…
The reaction to both the original petition and the recent USITC decision has been notable in the breadth of organizations and people reacting negatively, the near unanimity in condemning these moves. Here’s a sampling of reactors and reactions.
The solar industry – Those opposed to Suniva-SolarWorld include just about the whole rest of the US solar industry. Manufacturing jobs account for only 15% of the industry’s 260,000 jobs. For solar project developers, sales forces, installers, and even other manufacturers, new tariffs means increased costs and, likely, diminished prospects for success. As SEIA (the Solar Energy Industries Association) put it:
The ITC’s decision is disappointing for nearly 9,000 U.S. solar companies and the 260,000 Americans they employ… An improper remedy will devastate the burgeoning American solar economy and ultimately harm America’s manufacturers…
Indeed, SEIA has claimed that, if the petitioners are successful in their appeal to the USITC, “88,000 jobs will be lost nationwide, including 6,300 jobs in Texas, 4,700 in North Carolina and a whopping 7,000 jobs in South Carolina.”
Bipartisan voices — Before the recent vote, a bipartisan group of governors of leading solar states—Colorado, Massachusetts, Nevada, and North Carolina—sounded the alarm in a letter to the commission:
The requested tariff could inflict a devastating blow on our states’ solar industries and lead to unprecedented job loss, at steep cost to our states’ economies. According to a study conducted by GTM Research, if granted, the tariff and price floors would cause module prices to double, leading solar installations—both utility-scale and consumer-installed—to drop by more than 50 percent in 2019. At a time when our citizens are demanding more clean energy, the tariff could cause America to lose out on 47 gigawatts of solar installations, representing billions of dollars of infrastructure investment in our states.
Conservative groups – From the “strange bedfellows” department came the news that opponents also include conservative groups who don’t like the idea of mucking with trade, and particularly not in defense of two relatively minor companies. The Heritage Foundation, for example, spoke against what it said was “a case that could undermine the entire U.S. solar energy industry.”
Likewise, the American Legislative Exchange Council (ALEC), not usually on the same side of arguments as renewable energy companies or advocates, cited the broader solar industry’s impressive job tally and job progress in recent years, and the risks to even the manufacturing piece of that:
Many of those [260,000] workers are employed by other solar companies that have successfully figured out how to prosper in this growing industry. Over 38,000 solar workers are employed in manufacturing positions at firms domestically making solar components like inverters, racking systems and more…
Those 38,000 manufacturing jobs might disappear if artificially high input costs price the entire industry out of existence.
A broad coalition – The Energy Trade Action Coalition formed by SEIA, solar companies, ALEC, Heritage, plus utilities, retailers, and others in response to this Section 201 threat reacted to the recent decision by going after the petitioners themselves:
The ITC decision to find injury is disappointing because the facts presented made it clear that the two companies who brought this trade case were injured by their own history of poor business decisions rather than global competition, and that the petition is an attempt to recover lost funds for their own financial gain at the expense of the rest of the solar industry.
Security experts – For security types, the risks have to do with our military preparedness, resilience, and assurance; more than a dozen former members of the US military, including a lieutenant general and a rear admiral, weighed in with the USITC on the fact that “[t]his dramatic cost increase could potentially jeopardize the financial viability of planned and future solar investments on or near domestic military bases.” This could put at risk bases, missions, and critical services.
And the list goes on.
Not everyone is opposed, of course. Along with the petitioners themselves, a coalition of labor, manufacturing and agricultural interests, the Coalition for a Prosperous America, has spoken out in support of the Suniva-SolarWorld move, saying that the coalition “strongly believes that relief is needed in the face of an Asian import surge to prevent the complete collapse of a critical industry, the manufacture of solar panels”:
Thousands of workers have lost good paying U.S. jobs as a result [of overproduction by international module manufacturers]. That these severe effects occurred during a period of booming U.S. [solar] demand, and despite two successful solar trade cases, is all the more troubling.
But national opinion is overwhelmingly on the other side. Even Suniva’s majority owner, Hong Kong-based Shunfeng International Clean Energy, is purportedly against Suniva’s crusade.
With the September 22 commission decision that the petitioners were indeed seriously hurt by imports, the next step is the “remedy” phase, which starts with various parties weighing in to say what they think the fix should be.
Flush with (and surprised by?) the success of their ITC petitions, Suniva and SolarWorld have backed down a little in their demands… but only a little. Others are pushing for a “cure” much closer to a placebo, in the hopes of minimizing the damage to (other) US companies, US consumers, and American jobs.
The USITC then needs to make a recommendation to President Trump, by mid-November. And then the president needs to decide where this goes.
Meanwhile, SolarWorld has said it’s planning to ramp up production given the recent decision. The president of SolarWorld Americas is quoted as saying:
With relief from surging imports in sight, we believe we can rev up our manufacturing engine and increase our economic impact… [W]e at SolarWorld are prepared to scale up our world-class manufacturing operations to produce leading solar products made by more American workers.
That commitment to leaping right back in is a little hard to believe, given the uncertainties that remain while this plays out. The 2002 Section 201 case around steel tariffs ended in failure the following year, after a purported loss of 200,000 American jobs.
It’s the president’s call
What’s clear, though, is that this is potentially a pivotal moment in solar’s trajectory in this country. The US solar industry is about much more than manufacturing, and even the manufacturing sector is about more than cells and modules.
President Trump could take a tariff sledgehammer to the shining solar piece of our nation’s impressive clean energy momentum, favoring a small piece of the industry regardless of the damage to the rest. That would mean harming a sector that has been arguably the best story of job creation and economic growth over the last 10 years. Destroying US jobs while pretending he’s all about creating them.
Or our president could take minimal or no action, send out a victorious tweet or two, and let the US solar industry—in all its dimensions—continue to do its thing. Creating American jobs, not killing them. Strengthening our energy security, not weakening it. And benefiting millions of US customers with greater affordability and access to solar.
Let’s go with option B.
Support from UCS members make work like this possible. Will you join us? Help UCS advance independent science for a healthy environment and a safer world.