Earlier this month, the Trump administration decided to place tariffs on solar panels produced abroad. The tariffs could reach as much as 30%, which threatens to damage a $28 billion industry.
What is a tariff?
We’ve heard a lot about tariffs in the news recently, in particular in relation to China. They’ve been used as a way to threaten other countries into “fairer” trade practices, but what does that actually mean?
A tariff is a tax on imported goods. Generally, tariffs are imposed as a way to protect domestic industries. Making imported goods more expensive prevents foreign goods from entering the market and makes the domestic choice cheaper in comparison. Tariffs, however, generally skew the market, prevent fair and open trade among countries, and the costs are often borne by the consumer.
How will this impact solar?
The solar industry relies on foreign imports for about 80% of the parts used for solar panels. The Solar Energy Industries Association has projected tens of thousands of job losses throughout the industry. Some solar developers are already discussing pulling out of projects currently being worked on.
The Trump Administration has approved four years of tariffs on solar imports, starting at 30% with a gradual reduction to 15% over time. This is the latest in a slew of tariffs that have been imposed in an effort to level the domestic playing field against cheaper foreign products. It is also the latest attack on the renewables industry by this administration.
Earlier this week, the World Trade Organization (WTO) hosted a meeting to discuss the dispute between the US and China over these tariffs. The WTO’s appellate body confirmed its position that the US had not evidenced the need for these tariffs. Based on this decision, China is free to seek restitution for unfair trade practices.