The United States will impose a tariff on photo voltaic solar panels imported from China . This may slow the growth of the install base of solar power generation in the US because it is not currently cost competitive. Rebates are available through the federal and local governments and electric utilities to increase the adoption of this carbon free source of electricity, and it seems counter intuitive to add a tariff which will increase the cost of a solar installation.
Fair trade is a contentious issue between countries around the world. The US Commerce Department determined that the Chinese government is allowing Chinese companies to manufacture photo voltaic panels below cost by providing subsidies which the Commerce Department considers to be illegal . The actions of the Chinese government, trying to help manufactures in their country, shift the market share away from other places in the world. Since the US can not directly control the subsidies provided by the Chinese government, the choice was made to impose a fee on all panels imported from China into the US.
The import tax, or tariff, is between 2.9 and 4.73% . This should be low enough not to decrease the installation in the US, but a further increase in the tariff may occur in May. Imported panels from China have increased significantly in the last two years shown in the figure below. Solar panels coming from US companies have been reduced to 29% while imports from China have increase to nearly 50%. The manufacturing base in the US should be protected, but it should be balanced by the need to roll out significant carbon mitigating technology to the energy sector like photo voltaics.
The Chinese Chamber of Commerce does not agree that the subsidies given to their manufactures of solar panels violate the World Trade Organisation’s rules of fair trade . The US provides subsidies to solar manufactures, and utilities are required to have a certain amount of a green install base complicating the issue. The Chinese government and manufactures have made official statements that panels are being dumped onto the US market . Tariffs are probably bad for the adoption of solar panels at these early stages. As manufacturing capacity continues to grow, economies of scale may take hold and swing the Chinese manufactures into favor being able to produce lower cost panels even without subsidies. Allowing the US manufactures to compete with the Chinese on a level playing field now, may allow the domestic industry to thrive in the future.
The tariffs were expected to be as high as 20 to 30% and the stock prices after this ruling have increased for Chinese companies and plunged for US based companies . The market was expecting a higher tariff so the US Commerce Department may have found a good balance between protecting US manufactures some without impacting the rate of solar panel installation. Profit margins are razor thin in this competitive world-wide market, so this small tariff may be plenty to keep US companies in business. SunPower has more panels installed in California than Chinese companies, and First Solar has lower cost panels than Chinese companies . This tariff will help to kept US companies competitive, but subsidies their panels more instead of adding a tariff would be another way to level the field. Adding incentives to innovate revolutionary solar panels in the US would possibly be a better way to keep the US solar industry one step ahead of the Chinese instead of simply trying to keep subsidies fair.