The White House on Jan. 22 announced imposition of a 30 percent tariff on imported solar panels starting in 2019.
It couched the move as a way to provide relief for U.S. manufacturers, but the action will also likely increase the price of solar installations, and affect companies that provide infrastructure for the industry.
“It will have a ripple affect. The North Bay is the birthplace of the U.S. solar movement. We will be affected. No doubt about it,” said Ted Walsh, CEO of SolarCraft, a 35-year old company that installs systems in Marin, Sonoma and Napa counties, headquartered in Novato.
Due to the current administration’s track record on reversing environmental regulations, focus on being aggressive on trade issues, and bringing back fossil fuels, the solar industry had been anticipating the tariff, and over the last six to nine months the price of solar has already been increasing, said Walsh.
“I would expect the cost will continue to increase, but not dramatically. A lot of people in our industry are probably somewhat relieved. Had it been a 100 percent tariff, it would have killed the industry,” Walsh said. “It’s the latest in an onslaught on the environment. There is no real winner except the Trump administration.”
SolarCraft imports the majority of its solar panels from Canada, and had started stocking up about on product about six months ago, Walsh said.
The reason for the tariffs is inexpensive imports, especially from China, according to the U.S. trade Representative (USTR) which issued a fact sheet on the tariff. By providing subsidies and financing to its solar companies, China’s share of global solar cell production skyrocketed from 7 percent in 2005 to 61 percent in 2012. China currently produces 60 percent of the world’s solar cells and 71 percent of solar modules.
Over this period, the U.S. solar manufacturing industry “almost disappeared,” with 25 companies closing since 2012.
Currently more than 80 percent of U.S. solar installations use imported panels, and the majority come from Asia.
“From 2012 to 2016, imports grew by approximately 500 percent, and prices dropped precipitously. Prices for solar cells and modules fell by 60 percent, to a point where most U.S. producers ceased domestic production, moved their facilities to other countries, or declared bankruptcy,” the USTR said.
China accused Trump of jeopardizing the multilateral trading system by taking action on complaints under U.S. law instead of through the World Trade Organization.
“The U.S. side once again abused its trade remedy measures,” said a Commerce Ministry statement. “China expresses its strong dissatisfaction with this.”
Mexico said Trump’s decision not to exclude it from the measures was “regrettable.”
The tariff is set to decline over a four-year period, and the first 2.5 gigawatts imported are excluded, according to the fact sheet. By year four, it will be reduced to 15 percent.
The tariff is expected to result in an 11 percent decrease in U.S. solar installations over the next five years, according to new analysis by GTM Research, a division of Greentech Media, which provides market analysis and research reports.
Large, utility-scale solar installations will be more heavily affected than the residential and commercial solar segments, taking 65 percent of the expected 7.6 GW of reductions over the next five years, according to the analysis.
The tariff will also affect U.S. companies that support the majority of the industry’s infrastructure by manufacturing metal racking, wire conduits, and other ancillary parts. It will also mean less jobs for those installing the panels, Walsh said.
The Solar Energy Industries Association, which represents installation companies, said billions of dollars of solar investment will be delayed or canceled, leading to the loss of 23,000 jobs this year.
Cynthia Sweeney covers health care, hospitality, residential real estate, education, employment and business insurance. Reach her at Cynthia.Sweeney@busjrnl.com or call 707-521-4259.
The Associated Press contributed to this story.