If it feels like the solar industry is under siege, it might be because it is.
After mostly escaping a potentially destructive change to the tax code that could have severely affected tax equity finance for renewable energy, Politico is reporting that an unreleased memo is circulating in the White House making the case for imposing harsh tariffs against foreign solar module and cell manufacturers.
The report suggests that advisors to the president appear to be arguing the president should ignore the tariff recommendations of the U.S. International Trade Commission, which though broad, were not as harsh as those for which Suniva and Solarwold asked. Instead, the reporting suggests President Trump may want to impose even harsher tariffs than the petitioners requested.
The Section 201 trade case has been a top concern for the solar industry since its filing in March. On the one side, Suniva/SolarWorld made the economic nationalist case, saying unfair global competition had hurt domestic solar module manufacturers and were proximate causes of Suniva’s bankruptcy and SolarWorld’s financial struggles. On the other side, the Solar Energy Industries Association (SEIA) and its allies argued the market, aided by bad business decisions by Suniva and SolarWorld, led to their bankruptcies – not global competition.
It should be noted that two studies by independent firms IHS Markit and Greentech Media have suggested that the trade remedies proposed by SolarWorld and Suniva could slash the U.S. PV market by between 60% and 70%.
One of the reasons that GTM Research says that trade action under Section 201 could be so damaging is that tariffs could potentially apply to nearly all nations in the world (contrary to the Politico article which focused on China). This would make it impossible to either shift to imports from other nations and/or to move manufacturing around Asia, as was done after the imposition of import duties on China and Taiwan in 2014.
Suniva and SolarWorld dispute those reports and have offered their own report suggesting a decision in their favor could create nearly 115,000 new solar jobs.
As expected, the debate inside the White House is between market fundamentalists, who hate tariffs and believe in letting the market sort out solar module manufacturing dominance, and economic nationalists, who believe tariffs will help reinvigorate U.S. manufacturing in the solar market.
If Politico‘s reporting on this memo is correct, it appears the nationalists are winning, which could mean a potential loss for the United States solar market if the predictions by research firms IHS Markit and Greentech Media are correct.
The deadline for the president to decide on whether to impose sanctions is January 26, though a decision could come at any time.