President Donald Trump’s recent decision to apply tariffs on imported solar panels was met with strong reaction in Washington, reaction that was very much divided along political lines. But the initial evidence shows that the tariff is working.
No fewer than nine companies have announced manufacturing expansion plans in the U.S. market in the past several weeks, all of them motivated partly by the tariffs. The biggest is JinkoSolar, a Chinese manufacturer that said it is committing $410 million to build a plant in Jacksonville, Florida, that will employ 800 workers. The Jacksonville city council is, of course, thrilled, and has voted to give the company tax breaks in support of the investment.
Equally exciting, two American-owned companies, SolarTech Universal and Solaria, are planning to expand U.S. production in the coming months. The planned expansions demonstrate that effective tariffs can work, giving new life to a struggling American industry and strengthening the economy.
Critics complained that enforcing the law would harm solar demand. But an investigation by the Coalition for a Prosperous America (CPA) economics team has found that market demand is expected to continue rising this year. Many solar installers are hiring to meet increasing sales, and regional players are expanding, aided in part by federal and state support for renewable energy.
A look at the history of the U.S. solar market demonstrates why President Trump was justified in applying safeguard tariffs on imported solar panels. Over the past decade, China has grown extraordinarily aggressive in targeting the U.S. market.
In 2012, President Barack Obama imposed duties on Chinese solar panels after finding that massive subsidies had resulted in panels being sold in the U.S. at below fair market value. China responded by moving production to Taiwan, Malaysia and Singapore.
Such maneuvering, along with continued, robust government subsidization, enabled China to boost its share of the global solar market from 7 percent in 2005 to 70 percent in 2017. The U.S. solar cell manufacturing industry almost disappeared as a result.
Two U.S. solar panel manufacturers, Suniva and SolarWorld, subsequently brought a broader trade case to address China’s country-hopping maneuvers. Last month, Trump imposed tariffs on solar imports from all of the countries involved in the import surge.
The four-year order of remedial tariffs starts at 30 percent, then declines by 5 percent each year for the next three years. The first 2.5 gigawatts of imported solar cell capacity are exempt from the tariff.
The Solar Energy Industries Association (SEIA) argued against Trump’s action. However, a number of SEIA’s companies are foreign-owned or maintain supply lines tied to overseas producers. SunPower, for example, is owned by Total in France and manufactures product in Malaysia. Similarly, Trina Solar is one of China’s largest photovoltaic companies.
Last month, Trump imposed tariffs on solar imports from all of the countries involved in the import surge.
There’s a clear conflict when an organization argues against domestic safeguards for U.S. manufacturers — if their membership includes overseas producers whose interests conflict with America’s national interest.
But U.S. trade law maintains specific remedies to address exactly the types of dumped and subsidized product that were harming domestic producers. And the laws are designed specifically to provide recourse for U.S. firms that play by the rules of global trade.
The president’s decision to impose safeguard tariffs is a key first step in correcting the market and giving America’s solar panel manufacturers a chance to find solid footing. Today solar power accounts for only 6 percent of renewable energy production, and 0.9 percent of total U.S. energy production. With growth expected to increase significantly in the next 20 years, it’s clear U.S. manufacturers stand to gain — if given a level playing field.
It would be a disaster for the U.S. to surrender a critical technology that it invented to any country — especially to a competitive rival. The safeguard tariffs that Trump imposed are a necessary use of a longstanding trade remedy and one that should be implemented whenever America’s manufacturers face predatory attack from overseas.
Michael Stumo is CEO of the Coalition for a Prosperous America.
The opinions expressed by contributors and/or content partners are their own and do not necessarily reflect the views of LifeZette.