Economists don't like tariffs. In a 2011 survey of AEA members, only 5% disagree with the statement: "Tariffs and import quotas usually reduce general economic welfare." The U.S. has been generally moving towards freer trade over the past 35 years. That's what makes the current protectionist trend so puzzling (Trump’s Solar Tariffs Are Clouding the Industry’s Future):
Across North Carolina, textile factories and tobacco farms have disappeared, giving way to fields of solar panels.
But for those venturing into solar farming ..., the future of this vibrant industry is now cloudy. On Monday, the Trump administration announced that it would impose steep tariffs on imported solar panels, which could raise the cost of solar power in the years ahead, slowing adoption of the technology and costing jobs.
Mr. Trump has long championed trade barriers as a way to protect United States manufacturers from foreign competitors. On Monday, he also slapped tariffs on imported washing machines, and his advisers say additional measures on steel, aluminum and other products will soon be coming. ...
The two solar companies that had sought the tariffs, Suniva and SolarWorld Americas, argue that low-cost imports have decimated American manufacturing of solar cells and modules in recent years. Today, 95 percent of the solar panels used in the United States are imported from countries like Malaysia and South Korea, and the companies contend that tariffs are needed to protect the nation’s remaining solar factories. ...
But while the tariffs may help domestic manufacturers, they are expected to ripple throughout the industry in ways that may ultimately hurt American companies and their workers. Energy experts say it is unlikely that the tariffs will create more than a small number of American solar manufacturing jobs, since low-wage countries will continue to have a competitive edge.
Solar manufacturing now represents just a fraction of the overall jobs that have developed around the solar industry. 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.
Far more workers are employed in areas that underpin the use of solar technology, such as making steel racks that angle the panels toward the sun. And the bulk of workers in the solar industry install and maintain the projects, a process that is labor-intensive and hard to automate.
The tariffs the president announced start at 30 percent next year and ultimately fall to 15 percent by the fourth year. In each of the four years, the first 2.5 gigawatts of imported solar cells will be exempted from the tariff.
But by raising the cost of one all-important ingredient, the tariffs could make solar power less competitive with other sources of energy, like gas and wind, resulting in the construction of fewer solar projects. On Tuesday, the Solar Energy Industries Association said that the president’s action would result in the loss of roughly 23,000 jobs in the solar industry this year, as well as the delay or cancellation of billions of dollars of investments. ...
In North Carolina, state laws and tax incentives that favor solar projects selling power directly to the electrical grid have helped the industry expand to the point where it now powers more than 400,000 homes and employs around 7,000 people. ...
The move is expected to hit utility-scale solar projects like this one, which sell their electricity to power companies, particularly hard. Home and business owners may decide to continue buying solar panels for their rooftops, even if the price is a little higher. But when solar projects sell to a utility company, they compete with other sources of energy, and every cent counts.
Over the last eight years, an influx of cheap imported panels has driven down the cost of solar projects by 85 percent, according to Lazard, a financial advisory company. As a result, the number of solar installations has soared to 12 gigawatts last year, from less than one gigawatt in 2010.
While the tariffs are likely to slow the adoption of solar power in the United States, they will not entirely halt the industry. An analysis by GTM Research found that solar installations will continue to rise from 2018 to 2022, though there will be 11 percent fewer panels installed as a result of the tariffs.
One reason for the muted effect: Solar cells and modules account for one-third or less of the overall cost of solar systems, and the industry has been relentlessly cutting the costs of all components. All told, the tariffs will increase the cost of utility-scale solar projects by about 10 percent and residential rooftop systems by just 3 percent — raising them roughly to prices seen two years ago. ...
Duke Energy, a major utility company in North Carolina, said Tuesday that the tariff would cause it to carefully evaluate the economics of each of its solar projects. The company currently owns more than 800 megawatts of solar power capacity and had planned to build and buy more than 3,000 megawatts in the next five years.
Many analysts say the tariff may fall short of its goal of reviving solar manufacturing in the United States. While at least one company has reportedly expressed interest in opening a 1,000-worker module assembly plant in Jacksonville, Fla., that is likely to be a rare case.
It sounds as if the solar panel tariffs are designed mostly to increase the profits of Suniva and SolarWorld Americas (and hurt the little guys). The overall impact in the renewable energy markets will be small. The number of jobs added in production will likely be more than offset by jobs destroyed and the overall number of solar panels installed will be lower than otherwise. And the cost difference between coal and solar is so large that it won't help coal (the graph is from the same article):
