The High Price of Putting America First
January 29, 2018
Donald Trump’s much-touted tariff on imported solar panels and cells couldn’t be a worse fit for America’s energy needs. Instead of accelerating our use of solar power, it will discourage the development of this clean energy resource and rein in the growth of solar jobs. For a president who—in his rhetoric at least—is hell-bent on creating US jobs and putting America First, does this move make any sense?
As disparaging about renewable energy as he is enthused about coal, gas, and oil, perhaps it’s fitting that the president is brandishing a tariff that, at best, may keep a few failing solar manufacturers in business while undermining the industry as a whole. Trump’s executive order has its origins in a complaint that two ailing solar panel manufacturers filed before the US International Trade Commission (ITC) last spring. Suniva, headquartered in Atlanta, initiated the complaint, and SolarWorld America, with its factory operations in Hillsboro, Oregon, joined a short time later. These two companies have been struggling for years now, despite tariffs and anti-dumping penalties that were put in place by the Obama administration in 2012 and 2014, primarily targeting China’s solar exports. Suniva filed for bankruptcy in April 2017, just days before initiating its ITC complaint, and SolarWorld America is now up for sale, in the hope of helping its bankrupt German parent company return to solvency. These companies’ woes are echoed by the US solar panel manufacturing sector as a whole, borne out by the fact that nine out of ten solar panel purchases today come from abroad.
Trump’s tariff has a broader geographical reach than Obama’s, covering all imports of crystalline silicon solar panels and cells regardless of country of origin, but will it be any more effective in stimulating US investment in solar manufacturing? Lasting only four years, Trump’s measure starts as a thirty percent tariff and then drops to twenty-five percent in year two, twenty percent in year three, and fifteen percent in its final year. Within the tariff’s four-year timeframe, US solar companies will barely have had time to plan, finance, and build new capacity before the trade protection lapses. At that point, they will be exposed once again to the full force of lower-priced products coming from places like Malaysia, Korea, and China. Bottom line: If they survive at all, American solar cell and panel manufacturers will most likely remain small players in a hotly competitive global market.
Companies like Suniva and SolarWorld, having cut back production and staffing, may be able to revive idle plant capacity in relatively short order if demand for their products warrants it. SolarWorld, which laid off 360 of the 800 workers at its Oregon plant last summer, claims that the new tariff could help it restore 300 of those jobs. Suniva had only thirty-five employees in April 2017, having earlier laid off 230 of its workers. Whether this bankrupt company will be able to return to its peak employment level of 265 people remains to be seen.
Even if there is some reactivation of idle plant capacity, the employment gains are likely to be modest in absolute numbers. Solar manufacturing accounts for less than fifteen percent of the total solar work force of 260,000 people; the rest work as installers, sales reps, project developers, and in other non-manufacturing functions. Even within manufacturing, many are employed by companies that produce equipment other than the panels themselves: roof racks and ground mounting systems for solar installations, electricity inverters, and the like. None of these qualify for the Trump tariff.
While it may trigger a slight uptick in US solar cell and panel manufacturing jobs, the tariff will very likely cause much greater harm than good. According to the Solar Energy Industries Association, the overall price of solar systems will rise substantially, triggering a slump in utility-scale projects as well as smaller commercial and residential installations. An estimated 23,000 jobs may be lost—roughly nine percent of the solar work force. America’s 137,000 solar installers will be hit the hardest, but the losses will be felt across the industry.
A further downside, of course, is the toll on our transition to a more sustainable energy economy. Though installed solar capacity has grown at an average rate of sixty-eight percent annually over the past decade, we still get less than two percent of our electricity from the sun. That’s a small first step toward a future in which renewable fuels like solar and wind will have to supply most of our power needs. Bringing our global climate into balance demands no less. Protectionism will only stifle this growth.
About the Author
Philip Warburg, a lawyer, is a Non-Resident Senior Fellow at Boston University’s Institute for Sustainable Energy. He has written two books on renewable energy, Harness the Sun and Harvest the Wind, both published by Beacon Press. Follow him on Twitter at @pwarburg and visit his website.