Energy

Experts Say Recent Historical Examples Show Hefty Tariffs Could Destroy The Solar Industry

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Chris White Tech Reporter
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Experts point to examples in recent history to show that the economic tariffs President Donald Trump is considering leveling against the solar industry could do more harm than good to solar companies.

Critics are haranguing the International Trade Commission’s recent decision opening the door toward tariffs on the solar industry. They say that similar tariffs slapped against the steel industry during the Bush administration nearly destroyed the industry.

President George W. Bush enacted a 30 percent tariff during the early part of his first term on several types of steel imports, which led to supply shortfalls and dramatic price increases, according to Tom Werner, the CEO of SunPower Corp who opposes tariffs on solar technology imports.

Analysts eventually found that those higher prices led to a loss of nearly 200,000 U.S. jobs in 2002 alone, and the tariffs themselves led to about $4 billion in lost wages between February and November 2002. Bush lifted the tariffs later during his administration after European Union officials and others complained about their impact.

Werner was referring to an ITC panel’s decision Sept. 22 suggesting that solar panel producers Suniva and SolarWorld suffered significant injury due to the influx of foreign solar cell and module imports from Asia. The next step will determine what should be done to lessen the impact imports have on Suniva. Trump, who is generally supportive of tariffs, will then need to sign off on any new ideas protecting Suniva and SolarWorld.

Free market groups also believe tariffs routinely fail to address the problems they seek to eliminate.

“There’s a very good chance it could end up the same way,” Tori Whiting, a research analyst at the Center for International Trade and Economics at the Heritage Foundation, told reporters. Whiting was referring to the effect similar tariffs could have on the solar industry. Other conservative free market evangelists mirrored her comments.

“It’s a classic example of valuing the producer over the consumer,” Clark Packard, a policy analyst at free market group R Street, told The Daily Caller News Foundation earlier this month about a tariff’s basic structure. When prices increase, he noted, the consumer and smaller companies who rely on cheap products for business are the ones who get hammered.

“Sure, Suniva and SolarWorld, the two petitioners, and their employees may benefit from import restrictions, but other solar companies who use imported solar cells would face higher costs, layoffs, etc. and then consumers of solar products who would see prices spike,” he added.

The solar industry has grown significantly during the past decade, mostly because solar companies have capitalized on hefty government subsidies and tax credits, as well as from competition with the industry. Solar prices have declined by more than 50 percent since 2011 as a result, which allowed the industry to add more than 50,000 jobs in 2016.

“Companies all over the country are extremely sensitive to price changes driven by import restrictions,” Packard noted in a report earlier this month about Suniva’s push for the tariff. “Domestic solar companies are no different.”

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