At the beginning of 2018, President Trump initiated his trade war, adding tariffs to #solar panel imports with the intention if increasing solar panel production inside the U.S. The plan was to reduce costs for American production, but several other duties passed by the administration since then have made solar panel production much more expensive. At this point the plan for domestic expansion is now quite limited.
Tariffs Conflict Original Efforts for the Domestic Solar Industry
Conflicts that exist within the president’s tariffs place an overall downfall faced by the administration in efforts for economic development. Among these was a levy on imported washing machines intended for the benefit of domestic manufacturers, though it has been undercut by other tariffs on imported metals like steel and aluminum that are needed for production.
Within the solar industry, the conflicting tariffs that undermine the intended growth of the national industry is even more complex. Because U.S. production of solar panels is only a fraction of the global market, the January tariff sounded positive initially. However, after a positive outlook for the manufacturing industry, cost of purchase and installation for consumers rose significantly.
While some solar component makers shift production from China to U.S. manufacturers. Some of these are still being made outside of the U.S., such as Enphase #Energy now making microinverters in Mexico, while opposing company SolarEdge will move some production to Romania and Hungary. Basically, this defeats the purpose of the tariff. Reaching the legality of the tariff by avoiding China manufacturing, there is still plenty of production being completed outside U.S. borders.
With much to be seen in the $17 billion American solar industry, including over 250,000 employees in installation and development. Only about 20% of the national industry includes manufacturing work, according to the U.S. Energy Information Administration. In relation to attempts to increase American solar panel manufacturing, the conflicting challenges of the tariffs put in place this year currently. Hopes exist, as stated by the senior renewable energy specialist of the Commerce Department, that this trouble will slowly fade as trade agreements better develop between the U.S. and China.
Current Solar Manufacturers Limit Investments in Growth
One solar company, with manufacturing in Fremont, California, admits that this year’s tariffs have raised their U.S. production costs by 30%. Solaria’s Sharma states this is equal to the original solar panel import duty expense, leaving behind the interest that had originally existed in the growth of the California factory. The plan had been to increase to the full 40-megawatt capacity, but because of the tariff costs it kept production consistent.
Sunpower, another major U.S. solar company that manufactures in Oregon, is feeling the strain as a result of the January panel import tariffs. Along with company concerns, as much as they stated openly, tariffs place a damper on the manufacturing expansion that were intended by the original import tariff.
With several international solar panel manufacturers that also have U.S. factories, including LG of Korea and Heliene of Canada, the new tariffs are still expected to limit their production capabilities. Canadian Silfab Solar also expected elevated production costs at their American factory located in Bellingham, Washington due to the response of the latest tariffs presented by the president. The Asian manufacturer, First Solar, is expanding to an Ohio factory, but now believes higher costs for steel parts and aluminum frames will pose a great production cost increase because of the tariffs on those materials.
Additionally, the solar and electrical automotive manufacturer Tesla, wrote a letter of complaint in September to the U.S. Trade Representative. This letter stated the potential of the latest tariffs to halter American innovation, business expansion, and creation of national jobs. While Tesla did not comment directly on the effects they faced within U.S. operations as a result of the tariffs, there are apparently already challenges faced that limit increased output.
The Initial Denial of the January Tariff by the Solar Energy Industry Association (SEIA)
The SEIA is the primary trade group representing the solar industry as a whole. Statements have been made that they group initially opposed the January solar panel tariff due to the potential that the expected benefit was most likely an over-expectation, and that it would fail in the end. Without benefiting domestic manufacturing as planned it would not be able to make up for overall damage to the solar industry. And now, on top of the solar panel tariff, the additional import tariffs on materials needed for component manufacturing are slowing down the industry development even more. There had not been incredibly high expectations for domestic solar production, and now things are falling even farther by the wayside.