US Solar Industry Could Be Devastated By Today’s Tariffs Ruling — May Lead To Crushing Tariffs

September 22nd, 2017 by Jeremy Bloom

Are solar cells too cheap?  That’s what the US International Trade Commission effectively ruled Friday, granting bankrupt US manufacturers SolarWorld and Suniva’s petition for relief from cheaper imported solar panels.  Next, they’ll deliberate a remedy, which would likely mean job-crushing tariffs.  The solar industry says that with the price of panels jacked up, hundreds of projects would be canceled and tens of thousands of jobs would be lost. 

Buy American? 

The cost of imported cells has dropped sharply over the past year, part of a nonstop downward trend that has led to solar being one of the cheapest forms of energy available for new construction.  For most of the industry, that’s a good thing — the sector has been growing at 17% faster than the rest of the economy, with most of those jobs coming in installation.  But the handful of domestic panel manufacturers have found it hard to compete, and Suniva is in bankruptcy protection.  Apparently, the US ITC agreed with poor Suniva and SolarWorld; their ruling grants that solar cells “are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat of serious injury, to the domestic industry.” 

That’s just the first step of the process.  Next, the ITC must propose a remedy — such as tarrifs — by Nov 13, and then President Trump would have until Jan 12 to impose them (or not).  A White House statement after the ruling sounded quite reasonable: “The President will examine the facts and make a determination that reflects the best interests of the United States.  The U.S. solar manufacturing sector contributes to our energy security and economic prosperity.” 

But this White House is not widely regarded as an unbiased arbiter of facts.  Or science.  Or even common sense.  And the background here has been: Trump and his “America First/MAGA” team have been raring to go on some sort of tariff, but have reportedly been talked off the ledge on diplomatic nightmares like a steel tariff.  With that in mind, there are very few scenarios in which Trump would take a sober and moderate course, given the opportunity to stick it to two things he hates: solar energy and Chinese imports. 

Protecting Consumers from Low Prices

Solar panels are currently running about 32 cents per watt.  Suniva is asking for that to be more than doubled, to 78 cents. 

So get ready for tariffs, and higher prices, and job losses — about 88,000 good-paying jobs, according to the Solar Energy Industries Association.  Bloomberg’s New Energy Finance analyst Amy Grace figures that as much as $50 to $60 billion in construction could be affected.  There simply aren’t enough US-made solar panels to meet demand. 

Abigail Ross Hopper, the president and chief executive of the Solar Energy Industries Association (SEIA), responded to the ruling:

“This is a case about two companies who are bringing a petition about which almost the entire rest of the solar industry is in agreement in opposition…

“The ITC’s decision is disappointing for nearly 9,000 U.S. solar companies and the 260,000 Americans they employ.  Foreign-owned companies that brought business failures on themselves are attempting to exploit American trade laws to gain a bailout for their bad investments.” 

Fortunately, the rest of the solar industry gets to weigh in on the remedy phase — there will be a hearing on October 3 that is supposed to take into account the wider impact. 

Did This All Start as a Shakedown? 

Suniva Inc crowed, “President Trump can remedy this injury with relief that ensures US energy dominance that includes a healthy US solar ecosystem and prevents China and its proxies from owning the sun.” 

But patriotism was hardly the motive — as the Washington Post noted, “While US based, Solar World Americas is owned by a German firm and a majority of Suniva is owned by Shunfeng International Clean Energy, a Chinese company which has opposed the petition filed by Suniva’s restructuring officer …

“Suniva’s petition was filed by SQN Capital Management, a New York-based investment firm which lent Suniva money to purchase equipment and which is Suniva’s largest creditor.  In a May letter to the China Chamber of Commerce for Import & Export of Machinery & Electronic Products, SQN offered to drop the trade petition if it were paid about $52 million to cover its debts to Suniva.” 

It’s even more chicken-feed than that.  SQN demanded that Suniva file the case in order to get a mere $4 million loan to see it through the restructuring. 

And as Bloomberg points out, these kind of cases fell out of favor because most Presidents weren’t rash or stupid enough to impose tariiffs:

“The case is unusual — and not just because Suniva’s majority owner, Shunfeng International Clean Energy Ltd., opposes it.  It also was pursued under a rarely used provision of a trade law that offers companies a ‘global safeguard’ that can result in broad, uniform protection against imports — not just tariffs on specific countries or companies.  Under that 1974 trade measure, Suniva only had to prove that imports have caused it ‘serious injury’ — not that foreign competitors did anything unfair or illegal. …  Even when the ITC sided with domestic manufacturers, presidents were often unlikely to impose a penalty.  These cases have had a resurgence under Trump, whose protectionist rhetoric may be leading companies to think he’ll support tariffs or import quotas. 

So, a $29 billion industry may be destroyed because one greedy lender was trying to squeeze a few extra bucks out of a bad investment.  Welcome to the madness that is America in the age of Trump











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