ALL JOE HAD TO DO WAS NOT BE DONALD:

The economic theory behind solar tariffs is simple: Solar cells and panels made abroad are often cheaper, thanks to lower manufacturing costs and generous government subsidies from countries like China. So taxing imported panels should give the US solar industry a fighting chance at survival. 

At least that has been the thinking over the last 10 years and under three different presidential administrations. There's just one problem--the majority of the US solar industry has never supported them, arguing the tariffs have done nothing to bolster domestic production and have actually slowed the pace of decarbonization.

This contradiction has become abundantly clear over the last two months. In late March, the Biden administration quietly announced plans to investigate a complaint from a small solar manufacturer called Auxin Solar, which argued that Chinese firms are circumventing trade restrictions by manufacturing solar panels and cells in Southeast Asia.  

The response from the US solar industry was swift. Trade groups called the investigation a "disaster," "devastating," and a move that would "effectively freeze" solar development at a time when more renewable energy sources are desperately needed. Eighty percent of the solar panels imported into the US come from Cambodia, Malaysia, Vietnam, and Thailand. If the investigation supports Auxin's complaint, those countries would be subject to additional tariffs on imports to the US Earlier this month, a bipartisan group of 22 senators sent a letter urging President Joe Biden to quickly issue a preliminary finding, or risk "massive disruption" to solar companies unsure if prices for panels are about to skyrocket. 

 

Some negative consequences from the investigation have already come to pass. Two weeks ago, an Indiana utility announced that several solar projects had been delayed due to the upheaval in the market, and that as a result, two coal-fired power plants will now stay open until 2025, instead of 2023. The Solar Energy Industries Association, a trade group, estimates that 81 percent of solar installers in the US have seen shipments canceled or delayed. According to an analysis from the Oslo-based energy research firm Rystad, the US was estimated to install around 27 gigawatts of solar capacity in 2022; now that number could be as low as 10 gigawatts.

But the Auxin case is only the latest event to raise questions about the effectiveness of solar tariffs. The US has multiple layers of overlapping tariffs on solar panels manufactured in China, Southeast Asia, and most other foreign countries. At the same time, 86 percent of American solar jobs are in installing panels, not creating them. If tariffs increase the cost of the technology, they could slow growth and increase costs for the rest of the industry. Many analysts argue that tariffs are responsible for US solar prices being 43 to 57 percent higher than the global average.  

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