Tariff on imported solar panels -- a veritable smorgasbord of ignorance!

Great Debates
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Golly. Strap on your jackboots, Dopers, and prepare to stomp the hooey outta some of my ignorance (thoughtfully wrapped for you in parentheses, but feel free to tear apart whatever else I seem to be certain of)! The nature of this thread invites discussion of considering an elevated financial cost of solar as an investment in mitigating climate change. Let’s try and avoid that here–you’ll be preaching to the converted anyway.

GQ stuff:
In a nutshell, Pres. Trump has either enacted or supported (which?) a formidable tariff on Chinese (as opposed to all imported?) solar panels. As I understand it, this increases the net cost of the things to the American consumer by 30%. This hurts China a bit by tossing a jug of ice water on the American demand for their goods (I might pay $100 for a panel, but $130–no way!). This seems to be the foundation for much wailing, rending of garments, and gnashing of teeth amidst seething accusations along the lines of hamstringing USA solar industry in order to make fossils the more cost-effective option for power generation.

GD Stuff:
Ok, even if all of that is correct (please let me know where I’ve got it wrong!), doesn’t this tariff have another effect, namely: making USA-manufactured panels more financially competitive with Chinese? The effect of that would be more jobs on our turf, arguably fillable by former fossil workers. No? And further, if one is open to the idea of China is not our friend, doesn’t it make a certain amount of sense to develop the tech & experience here at home as a hedge against China deciding to ratchet up its own prices one day, just as OPEC does with oil when it wants t flex it’s muscle?

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As far as I can tell, the US has hardly any manufacturing capability for the components used in solar panels. I imagine that setting up an assembly line to put them together will not be that hard. No doubt, the moulded plastic frames can be produced locally; but the components will come from China, Japan or Germany. That may actually reduce costs as the components will be cheaper to ship than the bulky frames.

3

I’m sorry, what was the General Question you were asking? The only question mark in that paragraph is attached to a parenthetical comment…

4

US solar industry consists of several parts:
producing solar Panels - These would Profit from a high tariff, because their production Prices are naturally higher (wage alone, aside from allegations that China cuts Corners about protecting the enviroment from chemicals during production - plausible given how many other health/ safety/ anti-Pollution laws have provably been ignored in China in other industries)

installing solar Panels: These will be hurt, because it’s not one Panel for 100$, it’s the Price of a whole System, of which solar Panels are one, but no the only, part. (There’s also the converter electrial part, and the wage for experienced electricians / roofers to properly install the Panels (without damage to your Roof, making sure of stability) and hooking it up correctly).
So the whole Price for one Roof of one Family home is, let’s say, 5 000$, and that suddenly jumps.

In Addition, Trump has at the same time cut subsidies that help private citizens install small solar Units on their own Roof, which buffer the high Initial cost/ low saved capital many middle/ poor families have (but which pay back quickly from both saving on own power and selling Surplus to the electric Company)

From what I’ve read, most workers in US solar are in Installation, not production.
It might have helped production 10-15 years ago, back when cheap imported Panels were destroying most of productio companies; now most have gone out of Business, so not much help there. (OTOH, cheaper imported Panels raised customer availabilty).

Installation will be hurt by the loss of subsidies coupled with a raise in total consumer Price.

Again, because solar is high-tech, it was first developed in US and western countries, but lack of protective tariffs years ago mostly destroyed that market.

It would have made more sense to not link the tariffs to one Country, eg.China, but to lack of following worker, health and enviroment protection, as e.g. ILO Standards. But that would be difficult for US to call, given their own lack of compliance in that regard.

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Here’s Donald Trump's tariffs on panels will cost US solar industry thousands of jobs | Solar power | The Guardian an article with some Facts and Details.

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Thank you. I hate the guy, but I still resist the urge to knee-jerk disparage everything he does. If I’m grasping this right, the tariff may not be such a bad thing IF 1) US homeowners are incentivized to buy (gov’t rebates), and 2) US companies are incentivized to manufacture (gov’t subsidies we would no longer give to oil). Both would mitigate the artificially inflated price of the hardware, thereby nurturing the installation element. Does that sound right?

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Why, exactly? If I had no previous Information at all about him, I would give him the benefit of the doubt. However, we have a Long record of him: running businesses into the ground while pocketing Money for himself; cheating workers out of their wages before he even started.
In the past year, he has demonstrated that he lacks knowledge, lacks the awareness to seek experts, but listens to Extremist “alt-Facts” ideologues, Appoints positions blatantly on favours/ Money, and gets the rest of the ideas from the Republicans who similar don’t care about reality. (Or from Putin).

If somebody fumbles the ball 10 times, I’m not going to pass the 11th time. If somebody lies 1 000 times, I’m no longer obligated to give benefit of the doubt, I will assume that everything that Comes out of his mouth to be a lie. (Fool me once, shame on you, fool me twice, shame on me).

Yes: under different circumstances, which don’t apply, this might help. Since they don’t apply, it likely doesn’t.

8

The mitigation itself would also be artificial, and in fact Trump is lowering the subsidies for private installation making your 1) a -1).

9

Moved to Great Debates.

Colibri
General Questions Moderator

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Blind squirrels & such. And an immortal naiveté.

11

If the tariff is China specific, is there anything stopping a Canadian or Mexican company from buying Chinese panels and selling them on to the US with a ~10% markup?

12

Good question.

But didn’t Trump quit NAFTA, too? Or will that take some time to go into effect?

13

It would be possible for the government to offset the increase in prices due to the tariff increase by subsidizing the consumers of solar panels. It would be much cheaper and efficient to just send checks to the manufacturers of domestic solar panels rather than going through the complex process of identifying the consumers and getting the subsidies exactly right.

14

Not quite. There’s a reason that most European countries adopted the incentive of the 1 000 Roof program 1000-Dächer-Programm – Wikipedia started by the German government, where houseowners who put up solar on their Roof get a Special credit and a certain amount of subsidy - instead of paying the industry (which would have been simpler): this way, the benefit was twofold. The manufacturer got paid, and the People got solar on their Roof.
Simply paying the manufacturer doesn’t achieve the second Goal. Even if the govt. pays the manufacturer enough to give away the Panels for free, there’s still Installation cost, too.
Also, by giving a fixed amount plus credit, People still have to pay: meaning the government incentives those who are willing to do it, and creates a feeeling of ownership.
If the government just bought up all stock and sent some People around to install them on every Roof, many People would grumble about govnerment Intrusion on their property etc.

For poor People, Apartment houses etc. you adapt the program incentives.

15

I really don’t think this is designed to help anyone in America, it is just a way for Trump and his base to stick a finger in the eye of environmentalists.

Having said that, why is a 30% tariff so important? Solar panels are a small % of the cost of a solar installation.

This chart is a bit out of date, but it shows the panels were only 1/5 f the total cost of a solar setup.

I think in the US, a large scale utility solar setup is now about $2/watt and panels are about $0.50 a watt. So that’d add $0.15 per watt to the cost, which would increase total costs for a utility scale solar system by 7%. Not nothing, but would that really grind the industry to a halt? And that is utility scale solar, residential solar prices would probably only go up 3-4% due to this tariff.

16

I’m actually waiting for Trump to use this as an example of how he is helping out the coal industry. I’m expecting it to come up in some speech “… and I stopped those Chinese from dumping solar panels on the US. I’m keeping coal great!”

I don’t believe this one is about saving US manufacturing. I believe it’s about putting money in the pockets of non-solar energy producers.

17

A few years ago, neoliberal concepts had basically won out and no-one could imagine a country like the US embracing protectionist ideas.

But it’s also not too surprising we are where we are, because the benefits of protectionism are concentrated and easy to see. The much bigger benefits of free trade are spread throughout an economy, and are diffuse.
If you’re someone with a short attention span, like Mr Trump and most of his supporters, it looks like a good deal.

Imagine we put an import tariff on “widgets”. What are the benefits and drawbacks?

Benefits:
Encourages domestic production of widgets. In turn there will be more jobs making widgets, at least in the short term.

Drawbacks:
If ordinary consumers use widgets, then you’ve just essentially raised the cost of living for millions of people.
If widgets are used directly or indirectly in other industries, then you have made all those other industries less competitive with other companies around the world
And of course your widget industry is less competitive. Instead of capturing foreign market share, local companies are incentivized to focus on the local market, and are vulnerable to collapse if the tariffs are ever dropped.

All that said, there are political and strategic reasons you might want to impose tariffs (or subsidies), and maybe some of those reasons make sense. But from a purely economic POV, most analyses I’ve seen (and most of history), say it absolutely doesn’t work.

18

Mostly I think this effort

  1. Effected a “Green” industry that helps Trump with his labor base like coal as well as the anti-climate change body.
  2. It is a fairly small domestic industry that won’t have the power within the republican base to cause too much of a problem when it results in installers and other industries suffer from decreased sales.
  3. It is a small amount of imports for China, so it probably won’t result in real painful paybacks (they could impose tariffs on Soy and really hurt the republican base if they didn’t want to maintain the long term decorum)
    But it is playing with fire and will absolutely lead to increase costs for all consumers, as public utilities will need to take out larger loans on massive projects etc…
19

Trump hasn’t withdrawn from NAFTA yet, although he’s been talking about trying to get it “renegotiated”. But it wouldn’t matter in the scenario set up. NAFTA only applies to goods manufactured in one of the NAFTA countries. If a Mexican company imported Chinese solar panels and then sold them in the US, the panels would still be subject to import duties.

There’s a whole section of the NAFTA treaty, section 4, that defines the country of origin of a product, and it includes formulas that determine what percentage of a product has to be manufactured in one of the NAFTA countries to count as having originated from one of those countries.

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“Solar power won’t work!”
“Yeah, it will, because it is.”
“Well, its too expensive!”
“Used to be, but not any more.”
“Now it is, fixed that for ya. Your welcome.”