From the moment Donald Trump became president, industry leaders feared his threats to impose trade barriers could seriously hurt business. Now those fears have to come to fruition in the form of a 30% tariff on imported solar cells and panels, though residential installers may be least affected.
The decision will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing and will result in the delay or cancellation of billions of dollars in solar investments, according to the Solar Energy Industries Association.
The tariffs “… will create a crisis in a part of our economy that has been thriving, which will ultimately costs tens of thousands of hard-working, blue-collar Americans their jobs,” said Abigail Ross Hopper, SEIA’s president and CEO.
Other solar owners had even harsher reactions. “It boggles my mind that this president — any president, really — would voluntarily choose to damage one of the fastest-growing segments of our economy,” said Tony Clifford, Standard Solar’s chief development officer.
The tariffs’ effect will be to slam the brakes on that growth. “The U.S. solar manufacturing sector has been growing as our industry has surged over the past five years. Government tariffs will increase the cost of solar and depress demand, which will reduce the orders we’re getting and cost manufacturing workers their jobs,” said Bill Vietas, RBI Solar president.
More than 260,000 Americans are employed in the sector, but fewer than 2,000 of those employed in the United States are manufacturing solar cells and modules, according to the Solar Energy Industries Association. The solar industry had its biggest year ever in 2016.
But even before Trump imposed the tariffs, the damage was being done to the solar industry, Clifford said. That’s because the industry knew the case had been filed and expected Trump to impose the tariffs. As a result 2017 saw the loss of 10,000 jobs just in anticipation of tariffs, Clifford said. Now that the tariffs have become a reality, one large racking company is rumored to be laying off 25% of its workforce. “I worry that’s just the beginning,” he added.
Today, 95% of the solar panels used in the United States are imported from countries like China and South Korea. Solar is purchased by the watt and already the tariff has caused prices to jump from 30 cents a watt to as much as 54 cents a watt. Clifford expects prices to settle in the mid-40-cents-a-watt range.
Fortunately, those in the best position to handle the volatility of these tariff-induced market fluctuations are residential installers, Clifford said. That’s because these installers are competing against the retail price of electricity, which is closer to the price of solar than ever before. But residential installers’ fortunes will also depend on where they are working and what kind of state and local incentives they can still rely on to bring the cost of solar down.
No matter what, Clifford recommends waiting at least six months before making any major solar purchases. That’s when he expects prices to level off and stay relatively consistent for the next two years.
By then, the tariff will likely have been challenged at the World Trade Organization, where a number of countries including South Korea have filed complaints. The United States has never won such a case with the WTO, Clifford said, and it’s not expected to win this one, either. Thus, the tariff should end in about two years.
“Stick to your knitting, figure out where you can still make money and hunker down for six months,” he said. “But for now, people are going to have to accept lower margins.”