The new U.S. tariffs on importing solar cells and modules aren’t expected to have a major effect. Any changes they do bring about will be further weakened if manufacturers try a few workarounds identified in a new Bloomberg New Energy Finance report.
On Jan. 22, President Donald Trump slapped a 30 percent tariff on solar module and cell imports after the U.S. International Trade Commission said foreign imports had caused “serious injury to manufacturers.” More than 80 percent of solar panels are imported. Most of them come from Asian nations, the primary target of the tariffs, which start this year.
But other countries make photovoltaic panels that wouldn’t be subject to tariff, and solar makers could crank up production there. Among them are India, Turkey, South Africa and Brazil, which are listed by the World Trade Organization as “developing countries.” Trump left those off the tariff list to avoid a provocation at the WTO. The exempt countries could foreseeably produce 10.4 gigawatts of modules and 3.8 gigawatts of cells a year, the BNEF report showed.
Among the other strategies:
- Switch to thin-film modules such as those made by U.S.-based First Solar and Japan’s Solar Frontier. First Solar may expand capacity to take advantage of the tariffs, according to Bloomberg Intelligence.
- Assemble U.S.-made “cells” into modules outside the country. The rules may allow for imported wafers to be processed into cells in the U.S., moved outside the country to be assembled into modules that could then be brought back in without tariff.
- Manufacture at a loss, develop at a profit. Under this strategy, companies would sell themselves modules at low prices to keep the tariffs down and then resell into projects where they hold a stake.
- Make the modules from cells imported within tariff-free consumer products such as solar lanterns.
“The solar industry has proven itself to be extremely resourceful and resilient to protectionist measures,” said Hugh Bromley, one of the analysts who wrote the report. The potential strategies are “realistic, to varying degrees.”
The tariffs aren’t going to bring a new wave of manufacturing to the U.S. in any case, he said, especially given the Trump administration’s efforts to support coal and nuclear power over solar.
“Solar equipment has become a commodity whose basic components are in abundance across the world,” Bromley said. “Solar manufacturers build factories close to the demand centers. The U.S. is not a growing demand center, and is unlikely to attract investment under an administration that has shown hostility toward the sector and has walked away from the Paris Accord.”