President Donald Trump’s decision to impose tariffs on imported solar cells and modules could be challenged at the WTO or could be met by retaliatory tariffs by countries like China, expect industry experts. (Photo Credit: The White House )
- US President Donald Trump has announced a 30% tariff on imported solar cells and modules
- To be applicable for a period of 4 years, the tariff will come down by 5% every year
- The first 2.5 GW of imported solar cells will be exempt from safeguard tariffs for all 4 years
- GTM Research expects these tariffs to increase solar module costs by 10¢ to 12¢ per watt, reducing utility-scale solar installations by 9%
- Roth Capital Partners expects no country to be excluded from the list of nations to whom this tariff will be applicable
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After months of waiting and a lot of speculation about the way forward for the American solar PV industry, US President Donald Trump has finally delivered his verdict. He has imposed a 30% safeguard tariff on imported solar cells and modules for the first year. Every subsequent year, tariffs will fall by 5% to year 4, at which point the tariff is fixed at 15%.
Additionally, the first 2.5 GW of imported solar cells will be exempt from the safeguard tariff in each of these 4 years. The Office of the United States Trade Representative (USTR) stated while delivering the President’s verdict, “The President’s action makes clear again that the Trump Administration will always defend American workers, farmers, ranchers, and businesses in this regard.”
The decision came in the context of Suniva and SolarWorld Americas approaching the government complaining of imported PV products causing injury to the domestic industry. Reacting strongly to this decision, the Solar Energy Industries Association (SEIA) President and CEO Abigail Ross Hopper said, “While tariffs in this case will not create adequate cell or module manufacturing to meet US demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs.” The job loss in the American solar industry is estimated to be around 23,000 in 2018 alone, according to SEIA.
Module costs could increase by 10¢ to 12¢ per watt
While industry insiders expect this decision to be detrimental to the industry in the short term, a tariff of 30% is still less than the 35% duty recommended by the US International Trade Commission (USITC) in October 2017.
Back then, GTM Research anticipated that a tariff of 10¢ per watt would lead to a 10% dip in demand for utility-scale solar, but a tariff of 40¢ per watt (as demanded by Suniva) could shrink the market by 57% (see 36 GW Less Solar Due To US Tariff Possible). GTM Research’s Head of Americas Research MJ Shiao expects these tariffs to increase solar module costs by 10¢ to 12¢ per watt, based on current US import prices of 35¢ to 40¢ per watt. It expects utility-scale solar installations to fall by 9% with this tariff structure.
Expect no exclusions
The government has not yet revealed if this tariff is only applicable to PV products coming to the US from some specific countries or whether all countries are included. That may be announced soon, but Roth Capital Partners suggests these measures may be applicable to all countries, and that Canada, Mexico, Korea, or Singapore may not be excluded.
The tariffs are set to for a period of 4 years, but Trump’s decision could be challenged at the World Trade Organization (WTO) while China or other nations could come up with retaliatory tariffs.
Ending its press release on a positive note, the USTR said it will “engage in discussions among interested parties that could lead to positive resolution of the separate antidumping and countervailing duty measures currently imposed on Chinese solar products and US polysilicon.”