“I want someone to bring me some tariffs,” President Donald Trump reportedly said in an April meeting.
His demand looks poised to come to fruition, after the International Trade Commission (ITC) voted Friday in favor of two solar cell companies that claim there has been “injury” to the solar industry from low-priced Chinese solar imports. The ITC will recommend a remedy — widely expected to be tariffs — to the president by November 3.
SolarWorld and Suniva, the companies that brought the case, have asked for a $0.40/watt tariff on imported solar cells and a floor price of $0.78/watt on imported modules. But the broader solar industry, including its major trade association, says those remedies would have a devastating effect on the industry as a whole, triggering 88,000 job losses and raising costs for anyone who wants solar.
Suniva’s debtor in possession, an investment company known as SQN, brought the case in May, shortly after Suniva declared bankruptcy. Suniva’s majority holder, a Chinese company, has opposed the petition. SolarWorld, a subsidiary of a German company, joined the petition the following month, then announced it would lay off more than half the workers at its Oregon factory. The solar industry has countered that the two companies suffer more from bad business decisions than from low-cost imports.
Moreover, prior to filing with the ITC, SQN suggested in a letter to the Chinese Chamber of Commerce that for $55 million, this case would go away. The chamber has called on the United States to reject SQN’s “blackmail.”
Both Suniva and SolarWorld companies have manufacturing facilities in the United States, and both have had financial trouble in the past year, which they now blame on low-priced solar components, specifically crystalline silicon photovoltaic cells, from China.
In short, the case has pitted the two foreign-owned solar companies (one represented by an investment company) against much of the rest of the industry.
The ITC’s safeguard investigation was carried out under the little-used Section 201 of the Trade Act of 1974. Under that clause, rather than looking for illegal behavior, the ITC considers whether goods “are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported articles.”
But federal government remedies to trade imbalances don’t always work as intended. Back in 2001, then-President George W. Bush imposed tariffs on foreign steel following a Section 201 ITC finding. The move backfired, giving only a temporary boost to the domestic steel industry before dealing a major blow to the U.S. businesses that buy steel. Prices more than doubled, and U.S. manufacturers started buying parts from overseas suppliers with access to cheap steel.
In the past decade, solar has been one of the fastest-growing industries in the nation.
Earlier this week, a bipartisan group of governors sent a letter to the commission, opposing a “high tariff” or “high price floor.” The ITC will make a recommendation, but ultimately it will be up to Trump to determine what, exactly, the remedy will be.
A White House spokesperson on Friday told the AP that Trump “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 it’s difficult to predict what will happen. Trump has wide latitude to impose tariffs, set price floors, or undertake negotiations. And, so far, he has been staunchly focused on increasing jobs in fossil fuel sectors, particularly coal. Many of solar’s biggest proponents see clean energy as the only solution to reducing emissions and preventing catastrophic climate change. Trump, on the other hand, has denigrated the mere existence of climate change — calling it a “hoax.”
The industry is looking at his words differently.
“The president wants to create jobs, the president wants to maintain jobs, the president wants to incent innovation, the president wants increased energy security and economic prosperity — and that is the story of the solar industry,” Abigail Hopper, president and CEO of the Solar Energy Industries Association, said on a press call Friday. “That is entirely resonant with his rhetoric and concerns.”
Hopper said her group remains “steadfast” that tariffs are not an appropriate remedy. There is also a “reasonable expectation” that the United States will see any tariffs challenged at the World Trade Organization, she said, although she cautioned against jumping to conclusions.
Hopper said she is skeptical that tariffs will help even the companies that brought the suit. Manufacturing is a key component of the solar industry, but the United States already has 36,000 manufacturing workers. The “vast majority” of those workers oppose tariffs, she said. And in the meantime, they are waiting to hear what Trump will do.
“Regardless of what potential remedy could be imposed, there will still be a great deal of uncertainty,” Hopper said.
Earlier this week, Greentech Media reported that several overseas manufacturers were eyeing investment in the United States, but plans to build manufacturing here would take years to implement. There is also a question of whether free trade agreements might come into play. Mexico and Canada, for instance, could be exempt from tariffs. In that case, manufacturers might move operations to one of the United States’ North American neighbors.
Any remedy that Trump decides on will go into effect 15 days after he signs the order.