US Tariff & Chinese Solar Panels

On March 21, 2012 we heard that the US would be placing a tariff on Chinese solar panels. In the May 18 LA Times it was reported that a 31% tariff was requested. Tony Clifford, chief executive of Standard Solar, a solar developer and installer in Rockville, Md. said “US imports of cheaper Chinese solar panels had provided the catalyst for an overall dramatic price reduction in the last 2 years that has made solar installations more affordable for homes and businesses; the cost of outfitting a typical home today with solar panels runs about $20,000, half of what it did 2 to 3 years ago.” Customers also benefit from a 30% tax credit until 2016. Such US firms decried the anti-dumping duties saying that they risked a trade war with China and threatened to slow or halt the momentum of solar installations in the US. This action is one of the strongest by the Obama administration in addressing complaints of unfair Chinese trade and economic practices — an area that has made Obama a target of criticism from Republicans who say he's too soft. Earlier this year, Obama established a new trade enforcement unit to crack down on violators, specifically naming China as a potential target, as part of an overall strategy to boost domestic manufacturing, exports and jobs. But it isn't clear what the Commerce Department ruling will mean for US employment. Some domestic solar makers have shut down or cut employment, partly because of weaker growth in places such as Europe, there have been significant job gains at US businesses developing and installing solar panels. Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan Washington think tank said that even if the US solar energy industry loses some workers in the short run (like Solyndra) "That is never a reason for turning a blind eye to mercantilist trade practices". Of about 100,000 people employed in the industry last year, a little more than 50% were involved in solar installation, about 25% worked in manufacturing and the rest in sales and distribution, according to a Solar Foundation study.

A July 12 Washington (Platts) article said - Despite the Obama administration's imposition of tariffs on Chinese solar cells and panels US imports of the products increased 76% in May compared with April, according to data from the US Department of Commerce. The US imported $124.1 million in Chinese solar products in May, compared with $70.7 million in April. The Coalition for American Solar Manufacturing (CASM), a group of US companies that had filed a trade complaint against China that led to the tariffs, said that the tariffs are having an impact; citing that May imports were 45% below the $225.8 million imported in May 2011. "This significant decline in year-over-year totals reflects the market's rising recognition of the costs, risks and uncertainties associated with importing Chinese solar cells and panels" CASM said. For the first 5 months of 2012 the US imported $1.21 billion, up 22% from the $993.2 million in the same period last year. Commerce in March announced tariffs ranging from 2.9% to 4.73% on Chinese cells and panels to counteract China's subsidies for its domestic manufacturers; saying those subsidies are illegal under World Trade Organization (WTO) rules. The May figures do not yet reflect Commerce's decision in late May to impose additional duties on Chinese solar products, CASM said. Commerce said it would impose tariffs ranging from 31% to 250% for China's alleged "dumping" of solar panels in the US at below-market costs. China in late May filed a WTO complaint challenging the US tariffs.

The July 13 USA Weekly via China Daily said - JA Solar products (solar cells and modules) which are imported from China to the US would be subject to the tariffs. According to analytics firm HIS Inc exports of such equipment from China to the US could drop by half this year due to the tariffs. Solar installations jumped 109% last year according to the Solar Energy Industries Association and they expect that to double in 2012 although tariffs could slow the rate of growth in 2013. Shyam Mehta, an analyst with Boston-based GTM Research, estimates that the new tariffs could increase the cost of installing solar panels on a US house by 10%. The US is the world's 4^th biggest market for solar-energy equipment according to GTM. The US share of the global market could double by 2016. To avoid the US tariffs some companies are working to establish alternative manufacturing supply lines. In late May the Portland-based Oregonian newspaper reported that JA Solar was scouting Oregon and other western US states for potential factory sites; the company is also evaluating manufacturing options in other low-cost regions of Asia as "We already have supply lines in Mexico, Canada, Europe and Taiwan through our manufacturing partners. At this stage we are evaluating the business cases, making sure we fully understand the market opportunities so that we can provide the best options to support our customers." JA Solar is projecting a 10% increase in global sales this year due to strong demand in China and rapid growth in Japan since it moved to replace nuclear power following last year's tsunami-related disaster. China's solar market saw impressive 470% growth in panel installations last year. With growth prospects bright in the US and China JA Solar said "There are a lot of ways in which the US can help China and for China to help the US. We must not get distracted or discouraged by these tariffs.”

What I got from these articles is that other foreign owned companies have been successful with manufacturing in the US (e.g. Toyota) and even though Solyndra failed, US jobs can still be achieved.