Picture:REUTERS/FABIAN ANDRES CAMBERO
Picture:REUTERS/FABIAN ANDRES CAMBERO

Washington — Tariffs on solar panels imposed nearly two years ago by US President Donald Trump to protect US manufacturers from competitors in China and elsewhere are now the focus of a battle in Washington over whether the measures should be amended.

The US International Trade Commission (ITC) is holding a hearing on Thursday as part of a midterm review of the levies, scheduled to decline in 2020 and 2021. Suniva, a Georgia-based panel maker that first asked Trump for protection from Asian rivals, has already told the commission it wants to curtail those reductions. Yet the industry’s leading trade group says the duties should be eliminated early.

“We’ll be advocating for the administration to drop the tariffs altogether or at least grant reasonable exclusions to the tariffs,” Abigail Ross Hopper, CEO of the Solar Energy Industries Association (SEIA), the solar industry’s leading US trade group, said on a call with reporters. “Our fear, however, is that the administration will somehow make them harsher and not provide relief.”

The solar tariffs are part of Trump’s overall strategy to fight China and other trading partners that he argues have long taken advantage of the US and led to a record trade deficit. Since early 2018, the Trump administration has ratcheted up tariffs, which are a tax on imports, on an assortment of products and materials. They are among the issues being discussed to end the trade war between the world’s two largest economies.

While the solar tariffs prompted a handful of overseas panel makers to open US factories, they up-ended a market that largely relies on cheap imported equipment from Asia. The duties have driven up costs for developers and panel installers, who employ most of the industry’s workers. The US solar industry lost 8,000 jobs in 2018, a 3.2% drop, according to a report by the Solar Foundation.

It’s questionable whether the tariffs have actually reduced demand for imported panels. One of the world’s largest solar-panel manufacturers ... expects US demand for its products to surge nearly 45%, to 4GW, in 2020

The duties on imported solar panels were announced in January 2018 in a blow to the domestic renewable energy industry. The levies start at 30% and are scheduled to fall from 25% to 20% in 2020. Suniva argued in a pre-hearing filing with the ITC that the 5% reductions set for 2020 and 2021 should be scaled back.

Trump’s original action “provided negligible safeguards” for domestic solar panel manufactures, the company wrote, adding the tariff step down “needs to be adjusted to provide effective relief for the remainder” of the tariffs.

The company cited “headwinds” such as an exemption to the tariffs for certain solar panels, currently the subject a court dispute, and the stockpiling of solar cells by US companies having undercut the tariffs’ effectiveness.

The SEIA is arguing that the tariffs were unwanted in the first place and have caused more economic harm than benefit. The group released an analysis that said, if left in place, the duties will cost the industry $19bn in investment and will lead to 62,000 fewer jobs by 2021.

White House trade adviser Peter Navarro called the group’s report “fake news dressed up in academic mumbo jumbo”.

It’s questionable whether the tariffs have actually reduced demand for imported panels. One of the world’s largest solar-panel manufacturers, China’s JinkoSolar Holding, expects US demand for its products to surge nearly 45%, to 4GW, in 2020.

It’s possible that the ITC review results in no action, but the potential for a recommendation has set off a lobbying frenzy. Companies including LG Electronics, utility NextEra Energy, and EDF Renewables are scheduled to appear to weigh in on the review. So are representatives from the embassies of Korea and Indonesia.

The SEIA — which represents companies including rooftop installer Sunrun, and panel makers including JinkoSolar — is planning a rally at the ITC’s Washington headquarters before the hearing begins followed by a lobbying day on Capitol Hill.

“This has been very heavily lobbied on both sides,” said Gary Hufbauer, a non-resident senior fellow at the Peterson Institute for International Economics. “If they say it’s done more harm than good, then when it gets to the president that would influence him to some extent.”

Trump has wide authority to tweak the tariffs, including reducing or eliminating them, or removing them from certain countries, said Clark Packard, trade policy council for the Washington-based think-tank R Street Institute. Or he could simply leave them as is.

Wall Street is paying close attention as well. “We believe the probability of something happening is meaningful,” Roth Capital Partners wrote in a research note earlier in 2019.

Bloomberg