Tariffs—a Magic Fix for Solar Panels?


Last month, President Trump signed a tariff order, imposing a 30 percent tariff on imported solar panels.[1] Unlike some other executive orders that the President has signed before, there seems to be little question regarding the constitutionality of this one. Although the constitution does not explicitly give the President the power to levy tariffs as this power is left to Congress, Congress can delegate its power to the President by implementing statutes.[2] In the instant solar tariff case, President Trump relied on a section of trade law to take executive actions.[3] This section of trade law provides a “safeguard” for domestic industries that are “seriously injured or threatened with serious injury by increased imports,” allowing the President to determine the relief if such injury is found.[4] Putting the constitutionality issue aside, however, the question remains—is imposition of tariffs a magic fix to the current problems in the U.S. solar energy industry?

The levy was petitioned by two domestic solar panel manufacturers, Suniva and SolarWorld.[5] According to these two companies, “lower-cost imports have made it impossible to be profitable.”[6] This statement, however, was opposed by others in the solar industry, particularly the solar installers, which have benefited from the increased demand of low-cost panels.[7] In fact, the government’s Bureau of Labor Statistics predicted solar installation to be the fastest-growing occupation from 2016 through 2026.[8] This expected job growth now seems to be at risk¾the Solar Energy Industries Association estimated a 23,000 job loss this year due to the tariff.[9]

Before the solar tariff was imposed, U.S. consumers were already burdened by the “overly prescriptive local permitting requirement.”[10] Compared to Australian consumers, Americans pay more than twice as much for installing solar panels at home.[11] An increase in price caused by the new tariff will likely drive down the demand, hurting consumers and solar installers.[12]

A trade war between the U.S. and countries whose solar panel exports sustain the harshest impact of the tariff is another problem to worry about. China and South Korea have both reacted angrily to the newly adopted trade tariff, claiming they would take actions to defend their legitimate interests.[13] South Korea has taken their complaint to the World Trade Organization (“WTO”), seeking to challenge President Trump’s decision.[14] Unless South Korea withdraws its complaint in 60 days, the WTO will have the power to impose trade retaliation against the U.S. if it finds in favor of South Korea.[15] This happened in 2002 when President George W. Bush was forced to back down from a similar steel tariff he sought to impose.[16]

On the other hand, a Chinese manufacturer has taken a different route to avoid the tariff.[17] A week after President Trump imposed tariffs on imported solar panels, JinkoSolar announced its plan to construct a solar manufacturing facility in the U.S.[18] A new manufacturing facility will definitely create more jobs and help compensate the job loss caused in the solar installation sector.[19] However, it will also intensify the competition between U.S. domestic solar manufacturers and foreign companies—an awkward result that seems to defeat the purpose of Suniva-SolarWorld’s petition.[20]

The complexities of the solar industry seem to suggest that there is no simple fix to its problems. Although the actual effect of imposing tariffs on imported solar panels is yet to be known, the President seems to be determined to push through his protectionist policy. The White House advisers warned that additional trade measures related to steel, aluminum and other products from China could be coming.[21] A trade war, even if not in the solar industry, might still happen in the near future.

[1] Brian Eckhouse, Ari Natter & Christopher Martin, President Trump Slaps Tariffs on Solar Panels in Major Blow to Renewable Energy, Time (Jan. 22, 2018), http://time.com/5113472/donald-trump-solar-panel-tariff/.

[2] Caitlain Devereaux Lewis, Presidential Authority over Trade: Imposing Tariffs and Duties, Cong. Research Serv. (Dec. 9, 2016), https://fas.org/sgp/crs/misc/R44707.pdf.

[3] Ana Swanson & Brad Plumer, Trump Slaps Steep Tariffs on Foreign Washing Machines and Solar Products, N.Y. Times (Jan. 22, 2018), https://www.nytimes.com/2018/01/22/business/trump-tariffs-washing-machines-solar-panels.html.

[4] Understanding Safeguard Investigations, U.S. Int’l trade Comm’n, https://www.usitc.gov/press_room/us_safeguard.htm (last visited Feb. 3, 2018).

[5] Lynch, supra note 2.

[6] Kirsten Korosec, Solar Trade Case: Trump Says Yes to New Tariffs That Target China, Fortune (Jan. 23, 2018), http://fortune.com/2018/01/22/solar-trade-case-trump-says-yes-to-new-tariffs-that-target-china/.

[7] See id.; see Lynch, supra, note 2.

[8] Ed Crooks, Trump’s 30% Tariffs on Solar Imports Anger Global Sector, Fin. Times (Jan. 23, 2018), https://www.ft.com/content/288cac76-000c-11e8-9650-9c0ad2d7c5b5.

[9] Deb Haaland, Trump’s Solar Panel Tariff Will Cost 23,000 Us Jobs, Newsweek (Jan. 31, 2018), http://www.newsweek.com/trumps-solar-panel-tariff-will-cost-23000-us-jobs-796387.

[10] Brian Spak, Regulation Is Largest Barrier to Solar Power, Wall Street J. (Jan. 25, 2018), https://www.wsj.com/articles/regulation-is-largest-barrier-to-solar-power-1516903344?mod=searchresults&page=1&pos=15.

[11] Id.

[12] Id.

[13] Shawn Donnan & Ed Crooks, Trump Raises Temperature with New Tariffs in China Trade Battle, Fin. Times (Jan. 23, 2018), https://www.ft.com/content/ea72a0f6-ffc7-11e7-9650-9c0ad2d7c5b5; Hyunjoo Jin, South Korea Complains to U.S. About Tariffs on Washing Machines, Solar Panels, Reuters (Feb. 1, 2018), https://www.reuters.com/article/us-southkorea-usa-trade/south-korea-complains-to-u-s-about-tariffs-on-washing-machines-solar-panels-idUSKBN1FL4YR.

[14] Shawn Donnan, South Korea Hits Back at US with WTO Tariffs Challenge, Fin. Times (Jan. 25, 2018), https://www.ft.com/content/1c1927ae-01eb-11e8-9650-9c0ad2d7c5b5.

[15] Id.

[16] Id.

[17] Erin Ailworth, Chinese Firm Announces U.S. Solar Plant, a Week After Trump Tariffs, Wall Street J. (Jan. 29, 2018), https://www.wsj.com/articles/chinese-firm-announces-u-s-solar-plant-a-week-after-trump-tariffs-1517265369.

[18] Id.

[19] Id.

[20] Jake Novak, Trump’s Solar Tariff Gamble Pays off – for Now, CNBC (Jan. 31, 2018), https://www.cnbc.com/2018/01/31/trump-solar-tariff-scores-a-big-win-commentary.html.

[21] Swanson & Plumer, supra note 3.


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Fordham Journal of Corporate & Financial Law