Trump’s Solar Tariffs Turn 2 Years Old, Blistering an Industry

(Bloomberg) --

Today marks the second anniversary of Donald Trump’s first deployment of tariffs as U.S. president, and one of the main intended beneficiaries of his protection back on Jan. 22, 2018, was the American solar panel industry.

The move, based on a so-called 201 case requiring proof of serious harm from unfair global competition, put tariffs on $8.5 billion in solar modules and cells starting at 30% in year one and scaling down to 15% by year four.

Chinese imports were the big threat to domestic imports. One of the U.S. Trade Representative’s goals was talks with Beijing that yielded “fair and sustainable trade throughout the whole solar energy value chain, which would benefit U.S. producers, workers, and consumers.”

Since then, some solar companies that initially pushed the U.S. government for tariffs have either gone bankrupt or been acquired. Other firms that received exemptions or are otherwise unaffected by the levies have benefited. It’s also worth noting that neither the U.S.-China phase-one deal nor the U.S-South Korea agreement resolved the Trump administration’s solar concerns.

Jenny Chase, head of solar analysis for BloombergNEF, makes some other interesting points:

• U.S.-based First Solar has benefited, though much of its manufacturing capacity is in southeast Asia.
• Chinese solar module makers have set up factories in Malaysia and Vietnam to avoid the tariffs, so the module brands entering the U.S. market are much the same as before, but at higher prices.
• Anti-dumping and anti-subsidy tariffs on Chinese modules were actually in place since 2014, so Trump did not initiate this. China retaliated by setting tariffs on polysilicon made in the U.S., which has really hurt U.S. polysilicon makers Hemlock Semiconductor and REC Silicon.

The Solar Energy Industries Association released a report in December laying out the economic impact: 62,000 jobs lost or not created; some $19 billion in unrealized investment; U.S. solar panel prices that are 43%-57% higher than the global average; and carbon emissions will increase by an amount equal to 5.5 million cars.

That last part is particularly ironic given what’s also happening today in the Swiss Alps. Trump is just wrapping up meetings at the World Economic Forum, where government and business leaders are focusing on the dangers posed by climate change.

In his Davos speech on Tuesday, the president said the U.S. is “on the threshold of virtually unlimited reserves of energy, including from traditional fuels, LNG, clean coal, next-generation nuclear power, and gas hydrate technologies.” Much of his remarks were focused on his economic policies and trade deals with China, Canada and Mexico, saying they all should help boost the world’s largest economy later this year.

“We have a tremendous upside potential, when all of the trade deals and the massive deregulation starts kicking in — which will be during this year, especially toward the end of the year,” Trump said. “These agreements represent a new model of trade for the 21st century— agreements that are fair, reciprocal, and that prioritize the needs of workers and families.”

Charting the Trade War

Germany took first place in the 2020 Bloomberg Innovation Index, breaking South Korea’s six-year winning streak, while the U.S. fell one notch to No. 9. Singapore’s leap into the third-place ranking returns it to its post from two years ago. The annual Bloomberg Innovation Index, in its eighth year, analyzes dozens of criteria using seven metrics, including research and development spending, manufacturing capability and concentration of high-tech public companies.

Today’s Must Reads

• Dealing in Davos | French Finance Minister Bruno Le Maire said he’s hopeful for a compromise with the U.S. on digital tax to avoid a transatlantic trade war.
• Car threats | “A deal between ourselves and essentially Europe is something we all want to be able to make,” Trump says, while repeating a threat to impose tariffs on imported cars.
• Post-Brexit priorities | A deal with the European Union takes precedent over one with the U.S., U.K. Chancellor of the Exchequer Sajid Javid said in Davos.  
• Team of rivals | Chinese Vice Premier Han Zheng says his country’s trade deal with the U.S. won’t hurt rival exporting nations as complaints mount from governments that were left out of the agreement. Economists aren’t convinced.
• A quiet place | The U.S. Department of Justice said the White House can use executive privilege to decline to release a Commerce Department report advising Trump on proposed tariffs on imports of automobiles and car parts.

Economic Analysis

• Eastbound and down | Trucking tonnage pressure to persist after deceleration in 2019.
• King dollar | The U.S.-China trade deal goals are in jeopardy until the dollar weakens.

Coming Up

• Jan. 23: Japan exports
• Jan. 24: Monthly release of the CPB World Trade Monitor
• Jan. 21-24: Business and government leaders meet at the World Economic Forum’s annual meeting. Stay on top of all of the action via Bloomberg’s Davos Diary newsletter. Click here to subscribe.

--With assistance from Srinivasan Sivabalan.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net

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