This is potentially one of the biggest pieces of news of the Trump Administration.† As worldwide deployments of photovoltaic power grow exponentially, electrical energy will become dramatically cheaper starting in the mid-2020s, at least for diurnal uses. Consequently, the prices of goods produced by energy-intensive industries, such as aluminum and solar panels, will begin to drop precipitously, and new energy-intensive industries will become economically feasible, opening up vast new areas of the economy.
And, if these tariffs stand, the US will be at a 30% cost disadvantage in all of these areas, until at least two or three years after the tariffs end, perhaps as long as ten years. This will be a crippling disadvantage for US economic development; entrepreneurs in these industries will wisely avoid investment in the US.
Edit: the actual ruling is https://ustr.gov/sites/default/files/files/Press/fs/201%20Ca... and the tariff is 30% in year 1, 25% in year 2, 20% in year 3, and 15% in year 4. So it doesn't quite reach the mid-2020s when photovoltaic installation really skyrockets, but it seems likely that this tariff will be renewed and extended.
† I say this advisedly. I am well aware the Trump Administration has withdrawn from the Paris Accords; nearly started a second nuclear war, this one with North Korea; implemented a Muslim travel ban; and officially withdrawn from the TPP, although that was almost dead already. I am seriously arguing that handicapping the US economy in this way is at least as significant as these.
Trump didn't create this dispute--it has been ongoing for years, and Obama imposed tariffs on solar imports from China too.
China subsidizes solar and nearly all US manufacturers have been forced to move plants to compete, declare bankruptcy or shutdown.
The question is: after China obtains a stronghold in this market... then what? The Chinese subsides will eventually be removed, and solar panels will return to their natural price--but with all of the supply chain, supplies for materials, r&d, knowhow, etc centralized in and around China.. making it hard for non-Chinese companies to compete.
So look further out--when China no longer subsidizes solar... is that good for the US economy?
Having a big installed base of low op-ex power generation will be handy as prices fall, but panels installed now won't be the thing setting those mid 2020s prices.
I'm not posting in support of tariffs, I just don't see the connection between spending now (at today's panel prices and resultant kw-h/dollar) and lower future electricity prices.
> new energy-intensive industries will become economically feasible, opening up vast new areas of the economy.
This is a very exciting idea that never occurred to me. We always talk about the challenges facing solar regarding residential use. But a factory could schedule its operations for peak solar or even relocate entirely to places with reliable, consistent solar power. Very interesting.
You explain yourself why these tariffs aren't that big of a deal in the long term.
>"electrical energy will become dramatically cheaper starting in the mid-2020s, at least for diurnal uses. Consequently, the prices of goods produced by energy-intensive industries, such as aluminum and solar panels, will begin to drop precipitously, and new energy-intensive industries will become economically feasible, opening up vast new areas of the economy."
Not only will the tariffs halve in four years, photovoltaic prices will substantially drop in parallel. Better to give US manufacturers a chance to reach the promised land of solar you're predicting than allow them to crumble now.
Solar cost per kWh are still prohibitive for aluminium smelting. Specially because due to the production profile you can sell the energy at much higher price than what you could get by producing aluminium.
Wind OTOH produces a lot of energy at night where demand is low and you can't really shutdown turbines - you must use the energy. Yet I'm not sure if it's feasible to run a plant in those conditions.
Tax cuts will probably steam roll any effects of this tariff for the economy (unless we see a crash relatively soon, but whatever, Dow at 26,214, why stop now?)
I don't think domestic solar panels are 30% more expensive than imports anyway, especially into the future with tax cuts, so the actual increase price paid is probably less.
This is not necessarily a move against renewables as a whole.
>"The duties are lower than the 35 percent rate the U.S. International Trade Commission recommended in October after finding that imported panels were harming American manufacturers. The idea behind the tariffs is to raise the costs of cheap imports, particularly from Asia, and level the playing field for those who manufacture the parts domestically."
This is largely in support of American manufacturing. Of course it will harm the solar industry through increased prices, but Trump here is balancing an interest in solar with an interest in American industry.
Solar panel manufacturers cried foul while China simply out-managed the US players on the supply chain, so the US slapped tariffs on Chinese finished panels. China says, ok, so that's how you want it, and then they slap tariffs on cheap US-manufactured polysilicon. Most Americans (and sadly, most American politicians) don't know that up until recently those cheap Chinese solar panels started life as gravel, coal, and wood chips in America's rust belt. And jobs. Well, not anymore. South Korea, not near as foolish as the Obama administration, and not subject to the same high retaliatory tariffs, is now taking over the lead position in polysilicon. They didn't even say thanks.
Let's tour a polysilicon plant near Moses Lake, WA. Whoops. Closed down a few years ago when they couldn't compete with other countries for China's voracious polysilicon appetite. Hemlock Semiconductor, once the largest polysilicon manufacturer in the world, is hemorrhaging jobs left and right in Michigan. Both Hemlock and Wacker announced huge new polysilicon plants in Tennessee, investing billions, then mothballing them before they hit production because Uncle Sam suckerpunched the US polysilicon industry by playing anticompetitive with the US solar panel industry.
This made sense to an extent when the Democrats were in charge, because US solar panel factories were in blue voting areas and US polysilicon factories and suppliers were in red voting areas. Now it's simple pandering and incompetence.
Be careful with labeling it "American manufacturing". We've lost our worldwide leadership position and while we may buy American more at home, the rest of the world is moving on without our dominance.
There's not much balance - there are tons of people working to install solar panels, and very few producing them. He's harming the former and probably won't do much for the latter, long term. Not to mention people purchasing the things, and, while we're at it, the environment, because solar is by and large a lot better than many alternatives.
The correct response when someone who is sort of a competitor is selling you stuff below cost is probably to buy lots and lots of it.
This is an interesting move strategically. By making US-based solar panel manufacturers artificially more competitive, this tariff will allow them to develop in-house expertise and reduce dependency on China for the manufacturing stage of the supply chain.
If solar eventually becomes an important source of power, the US would not want to be wholly reliant on a geopolitical rival for manufacturing expertise. This could thus be construed as a vote for the long-term dominance of solar as an energy source.
There is a gazillion other imports that can be targeted with a tax. The most important thing for solar is to expand adoption by keeping costs low. Solar is such a small industry that it will have zero impact on American manufacturing overall. This tax will only raise costs of solar without doing anything for domestic manufacturing
The problem is that the US's comparative advantage over China will surely be solar services (installation, maintenance, support) rather than raw hardware manufacturing. And the solar service industry is hurt by tariffs on Chinese panels.
Also, it's arguably good for the long-term health of renewable energy as a whole, since China would presumably want to turn a nice big profit on their investment once they'd driven all the other manufacturers out of business and the expertise to actually do so had been lost elsewhere.
I think this is the right response. Throughout history, you see that when countries preserve their manufacturing, their economy, as a whole does better. We've seen it with the rise of China over the past few decades, isolationist Japan during their industrial revolution, and even America with their industrial revolution.
Sounds similar to what Europe did. Europe added a 47% anti-dumping and anti-subsidy tariff on Chinese solar panels years ago because Chinese manufacturers were selling them below cost. Many commentators have pointed out China aggressively subsidized their solar industry in an effort to starve foreign competition and dominate the global market. Looking back it seems like their effort has been rather successful. Two-thirds of the world's solar panel production capacity is now controlled by China.
And it was a very stupid thing to do, and I say that as an European. If the Chinese Government and its citizens want to subsidize clean energy production in Europe by selling us subsidized solar panels why should we say no? A similar question was posed by Jean-Baptiste Say about 200 years ago end since then no protectionist politicians were able to come up with a valid answer, they just go "by their instinct" or "it's best for our home industry that we behave this way", both answers that don't stand on any solid rational grounds.
Anyone got trends or articles on how that affected solar adoption in Europe? I presume downward pressure but was EU-based manufacturing able to close some of the price gap or were there other forces that helped cushion the blow?
I thought that dumping was selling below the cost of production. But publicly listed big producers like JinkoSolar and Hanwha Q Cells have positive EPS for 2017, albeit not by much:
Further, the tariff applies to all imported cells, not just those originating in mainland China, which is odd if this just to counter unfair advantages that Chinese factories get.
>Further, the tariff applies to all imported cells, not just those originating in mainland China, which is odd if this just to counter unfair advantages that Chinese manufacturers get.
If the tariff were just to target China, China would just route the shipments through other countries to get around the tariffs.
There was some controversy, but much less than with these current broad tariffs.
Such broad tariffs usually leave the industries weak and fat, and after they are finally lifted they will do no better at competing in a global marketplace.
Why just solar, why not place tariff's on all imported goods unfairly priced and dumped into the US market. The US market is bleeding cash.
Our number one export in the future (besides our currency) might be the garbage piles of all the unfairly low priced goods we see as disposable, if it isn't already.
One positive is this may help US manufacturers. The Asian countries with strong economies (China, Japan, Taiwan, South Korea) adopted similar policies in the later half of the 20th century to help develop their manufacturing industries. It worked. The Asian countries that didn't adopt similar policies are still poor today.
1 Business lobbies to get oppressive tariffs promising it will spur innovation
2 Tariff passes, business market value rises because of reduced competition
3 Business stops innovating because there is no foreign competition
4 Business shares stagnate without innovative product line because there is little need to innovate
5 Business lobbies for higher tariffs, repeat from step 2
It can be argued that tariffs are little more than Pyrrhic victories for the industries involved that hold back the nation as a whole and create a downward spiral
This will, of course, raise the cost of solar equipment and washing machines in the U.S. I can understand the GOP wanting to raise the cost of solar power in order to increase the use of fossil fuels, but why washing machines? Did Maytag make a large campaign contribution?
I had been under the impression that Maytag had moved all their production to Mexico and elsewhere, but apparently not. According to this article, they moved some of it back to the US from Mexico (note: Whirlpool owns Maytag).
How could this affect US solar prices/watt over the next 10 years or so? People seem to be taking a "this could be good in the long run" approach but there seems to be evidence that we don't have a "long run" to tackle climate change [1]. We seem to be playing chicken with a freight train and hoping that the economics will allow us to survive (because capitalism is more important than survival, essentially).
I'm not saying this is a bad move necessarily (I'm not entirely against protecting domestic industry to some extent), I'm just wondering if we were able to muster the collective will to take climate change seriously and do more than just let the market do its thing and hope for the best, how seriously could this affect the total cost? If we were to need to install 500GW of solar power over the next 5-10 years, would this dramatically increase the cost of that effort? Is it remotely possible that domestic production could accommodate a massive public push for solar?
I've always found anti dumping actions slightly hypocritical. If they just came out and said explicitly it's protectionist and stopped belabouring other economies with the free trade stick, I'd maybe feel better about it.
Roll on peskovite (that's kind of a joke in context)
I did a rough calculation that the value of all solar power generated in 2018 is about the same as the value of we would get out of removing side mirrors from our cars ( about 2% gas saving due to better aerodynamics) and replacing them with cameras/lcd displays. Where are the SV startups doing this? Seems like a huge gain. And we would no longer have to worry about hitting the mirrors when we us a drive up window...
Note on this topic: "Solar panels imported from China already have hefty tariffs, but proponents of heavier tariffs say Chinese manufacturers get around those trade remedies by establishing operations in Vietnam and Malaysia and exporting to the U.S. from those countries."
It's a political problem not an economic one. From an economic perspective, I am happy that the Chinese government wants to subsidize American solar installations with Chinese capital. As an American worker or American solar technology innovator, I am unhappy that I can't compete.
BOTTOM LINE: you don't win political power/elections by pandering to consumers - you win by pandering to producers.
I think, on the whole, it’s a fair policy. Certain countries (China) have been known to engage in dumping[0] of solar panels. So it’s a valid trade policy to protect against dumping.
Because phones aren't a strategic asset with geopolitical importance. If China corners the market on solar then they would be able to undermine US energy production in any protracted war (shooting, trade or other), it would be the future equivalent of cutting off the oil/coal supply but with more lag time.
Being unable to get new phones would merely be a personal inconvenience.
China is highly dependent on foreign coal, so they also have a strategic interest in creating energy independence.
[+] [-] kragen|8 years ago|reply
And, if these tariffs stand, the US will be at a 30% cost disadvantage in all of these areas, until at least two or three years after the tariffs end, perhaps as long as ten years. This will be a crippling disadvantage for US economic development; entrepreneurs in these industries will wisely avoid investment in the US.
Edit: the actual ruling is https://ustr.gov/sites/default/files/files/Press/fs/201%20Ca... and the tariff is 30% in year 1, 25% in year 2, 20% in year 3, and 15% in year 4. So it doesn't quite reach the mid-2020s when photovoltaic installation really skyrockets, but it seems likely that this tariff will be renewed and extended.
Edit: I added a comment at https://news.ycombinator.com/item?id=16209749 with calculations about the physical size of the panels needed for the energy-source transition.
† I say this advisedly. I am well aware the Trump Administration has withdrawn from the Paris Accords; nearly started a second nuclear war, this one with North Korea; implemented a Muslim travel ban; and officially withdrawn from the TPP, although that was almost dead already. I am seriously arguing that handicapping the US economy in this way is at least as significant as these.
[+] [-] rgbrenner|8 years ago|reply
China subsidizes solar and nearly all US manufacturers have been forced to move plants to compete, declare bankruptcy or shutdown.
The question is: after China obtains a stronghold in this market... then what? The Chinese subsides will eventually be removed, and solar panels will return to their natural price--but with all of the supply chain, supplies for materials, r&d, knowhow, etc centralized in and around China.. making it hard for non-Chinese companies to compete.
So look further out--when China no longer subsidizes solar... is that good for the US economy?
[+] [-] bufferoverflow|8 years ago|reply
Trump is just trying to hurt solar, because he is paid by the dying coal industry. But he can't stop the inevitable, maybe slow it down slightly.
[+] [-] maxerickson|8 years ago|reply
I'm not posting in support of tariffs, I just don't see the connection between spending now (at today's panel prices and resultant kw-h/dollar) and lower future electricity prices.
[+] [-] DubiousPusher|8 years ago|reply
This is a very exciting idea that never occurred to me. We always talk about the challenges facing solar regarding residential use. But a factory could schedule its operations for peak solar or even relocate entirely to places with reliable, consistent solar power. Very interesting.
[+] [-] s0rce|8 years ago|reply
[+] [-] meri_dian|8 years ago|reply
>"electrical energy will become dramatically cheaper starting in the mid-2020s, at least for diurnal uses. Consequently, the prices of goods produced by energy-intensive industries, such as aluminum and solar panels, will begin to drop precipitously, and new energy-intensive industries will become economically feasible, opening up vast new areas of the economy."
Not only will the tariffs halve in four years, photovoltaic prices will substantially drop in parallel. Better to give US manufacturers a chance to reach the promised land of solar you're predicting than allow them to crumble now.
[+] [-] cjalmeida|8 years ago|reply
Wind OTOH produces a lot of energy at night where demand is low and you can't really shutdown turbines - you must use the energy. Yet I'm not sure if it's feasible to run a plant in those conditions.
[+] [-] acct1771|8 years ago|reply
[+] [-] FLUX-YOU|8 years ago|reply
I don't think domestic solar panels are 30% more expensive than imports anyway, especially into the future with tax cuts, so the actual increase price paid is probably less.
[+] [-] meri_dian|8 years ago|reply
>"The duties are lower than the 35 percent rate the U.S. International Trade Commission recommended in October after finding that imported panels were harming American manufacturers. The idea behind the tariffs is to raise the costs of cheap imports, particularly from Asia, and level the playing field for those who manufacture the parts domestically."
This is largely in support of American manufacturing. Of course it will harm the solar industry through increased prices, but Trump here is balancing an interest in solar with an interest in American industry.
[+] [-] mchannon|8 years ago|reply
Solar panel manufacturers cried foul while China simply out-managed the US players on the supply chain, so the US slapped tariffs on Chinese finished panels. China says, ok, so that's how you want it, and then they slap tariffs on cheap US-manufactured polysilicon. Most Americans (and sadly, most American politicians) don't know that up until recently those cheap Chinese solar panels started life as gravel, coal, and wood chips in America's rust belt. And jobs. Well, not anymore. South Korea, not near as foolish as the Obama administration, and not subject to the same high retaliatory tariffs, is now taking over the lead position in polysilicon. They didn't even say thanks.
Let's tour a polysilicon plant near Moses Lake, WA. Whoops. Closed down a few years ago when they couldn't compete with other countries for China's voracious polysilicon appetite. Hemlock Semiconductor, once the largest polysilicon manufacturer in the world, is hemorrhaging jobs left and right in Michigan. Both Hemlock and Wacker announced huge new polysilicon plants in Tennessee, investing billions, then mothballing them before they hit production because Uncle Sam suckerpunched the US polysilicon industry by playing anticompetitive with the US solar panel industry.
This made sense to an extent when the Democrats were in charge, because US solar panel factories were in blue voting areas and US polysilicon factories and suppliers were in red voting areas. Now it's simple pandering and incompetence.
Be careful with labeling it "American manufacturing". We've lost our worldwide leadership position and while we may buy American more at home, the rest of the world is moving on without our dominance.
[+] [-] davidw|8 years ago|reply
The correct response when someone who is sort of a competitor is selling you stuff below cost is probably to buy lots and lots of it.
[+] [-] didgeoridoo|8 years ago|reply
If solar eventually becomes an important source of power, the US would not want to be wholly reliant on a geopolitical rival for manufacturing expertise. This could thus be construed as a vote for the long-term dominance of solar as an energy source.
[+] [-] dmode|8 years ago|reply
[+] [-] jessriedel|8 years ago|reply
[+] [-] makomk|8 years ago|reply
[+] [-] buildawesome|8 years ago|reply
[+] [-] 0wing|8 years ago|reply
[+] [-] unknown|8 years ago|reply
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[+] [-] tristanj|8 years ago|reply
[+] [-] paganel|8 years ago|reply
[+] [-] entee|8 years ago|reply
[+] [-] JKCalhoun|8 years ago|reply
The carrot approach would have bene to prop up companies like Solyndra. We know how that was received.
[+] [-] maehwasu|8 years ago|reply
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[+] [-] SEJeff|8 years ago|reply
https://electrek.co/2018/01/09/tesla-solar-roof-tile-install...
This isn't necessarily great for the solar industry, but this is great for Tesla!
[+] [-] jczhang|8 years ago|reply
[+] [-] philipkglass|8 years ago|reply
http://www.nasdaq.com/earnings/report/jks
http://www.nasdaq.com/earnings/report/hqcl
Further, the tariff applies to all imported cells, not just those originating in mainland China, which is odd if this just to counter unfair advantages that Chinese factories get.
[+] [-] FLUX-YOU|8 years ago|reply
If the tariff were just to target China, China would just route the shipments through other countries to get around the tariffs.
The upside to this news is that the tariff expires after 4 years according to http://thehill.com/policy/energy-environment/370171-trump-im... while the Bloomberg article implies it will stick at 15 percent until someone cancels it.
[+] [-] epistasis|8 years ago|reply
http://www.nytimes.com/2012/10/11/business/global/us-sets-ta...
There was some controversy, but much less than with these current broad tariffs.
Such broad tariffs usually leave the industries weak and fat, and after they are finally lifted they will do no better at competing in a global marketplace.
[+] [-] bfrog|8 years ago|reply
Our number one export in the future (besides our currency) might be the garbage piles of all the unfairly low priced goods we see as disposable, if it isn't already.
[+] [-] workthrowaway27|8 years ago|reply
[+] [-] epistasis|8 years ago|reply
It's a tiny number of manufacturing jobs, at the expense of far more solar installation jobs, and the largely US-owned companies that do installs.
[+] [-] king07828|8 years ago|reply
1 Business lobbies to get oppressive tariffs promising it will spur innovation
2 Tariff passes, business market value rises because of reduced competition
3 Business stops innovating because there is no foreign competition
4 Business shares stagnate without innovative product line because there is little need to innovate
5 Business lobbies for higher tariffs, repeat from step 2
It can be argued that tariffs are little more than Pyrrhic victories for the industries involved that hold back the nation as a whole and create a downward spiral
[+] [-] xpda|8 years ago|reply
[+] [-] dreamcompiler|8 years ago|reply
http://www.toledoblade.com/business/2017/03/19/Huge-Whirlpoo...
[+] [-] okreallywtf|8 years ago|reply
I'm not saying this is a bad move necessarily (I'm not entirely against protecting domestic industry to some extent), I'm just wondering if we were able to muster the collective will to take climate change seriously and do more than just let the market do its thing and hope for the best, how seriously could this affect the total cost? If we were to need to install 500GW of solar power over the next 5-10 years, would this dramatically increase the cost of that effort? Is it remotely possible that domestic production could accommodate a massive public push for solar?
[+] [-] ggm|8 years ago|reply
Roll on peskovite (that's kind of a joke in context)
[+] [-] jtlienwis|8 years ago|reply
[+] [-] hooande|8 years ago|reply
http://thehill.com/policy/energy-environment/369838-week-ahe...
[+] [-] ankushnarula|8 years ago|reply
BOTTOM LINE: you don't win political power/elections by pandering to consumers - you win by pandering to producers.
[+] [-] neo101|8 years ago|reply
This article is old, but I think it is still the same: http://www.washingtonpost.com/wp-dyn/content/article/2008/03...
[+] [-] ShabbosGoy|8 years ago|reply
[0] https://en.m.wikipedia.org/wiki/Dumping_(pricing_policy)
[+] [-] chiaro|8 years ago|reply
https://en.wikipedia.org/wiki/Open%E2%80%93closed_political_...
[+] [-] coldcode|8 years ago|reply
[+] [-] dang|8 years ago|reply
[+] [-] thatcat|8 years ago|reply
[+] [-] yorby|8 years ago|reply
[+] [-] flukus|8 years ago|reply
Being unable to get new phones would merely be a personal inconvenience.
China is highly dependent on foreign coal, so they also have a strategic interest in creating energy independence.