Dive Brief:
- President Donald Trump on Monday announced new tariffs on a variety of Chinese goods, including inverters used in solar panels throughout the U.S.
- The "second phase" of tariffs will be 10% on $200 billion of goods imported from China effective Sept. 24, before increasing to 25% on Jan. 1. This marks the first official announcement since Trump mentioned to reporters in June that he wanted to impose a 25% tariff.
- The new duties will likely increase the cost of solar inverters, but those make up "a very small portion in the total system cost," according to Credit Suisse Securities analyst Maheep Mandloi. The impact of this round of tariffs on the solar market is lessened further by the decline in solar module costs.
Dive Insight:
The president's statement noted a third phase of tariffs, which would affect approximately $267 billion of Chinese imports, would be triggered by any retaliatory action from China. On Tuesday, China retaliated by announcing tariffs on $60 billion of U.S. goods, which would come into effect on the same day as the additional 10% rate.
The announcement affirms that "we're escalating the so-called trade war," Erica York, an analyst at the Tax Foundation, told Utility Dive.
"It doesn't appear that there's an end in sight," she said, as the third phase of the imports is meant to address the remainder of Chinese goods that would be bought in the U.S.
The Tax Foundation, a conservative think tank, modeled the impacts of the Trump administration's tariffs, including the new 10% enacted this week and the estimated increases, highlighting a loss in jobs, wages and the country's larger economic performance.
Sept. 18 update: Impact of Trump Administration Tariffs
Enacted | Threatened | |
---|---|---|
Tariff revenue (Billions of 2018 Dollars) | $41.95 | $129.83 |
Long-run GDP | -0.12% | -0.38% |
GDP (Billions of 2018 Dollars) | -$30.43 | -$94.38 |
Wages | -0.08% | -0.24% |
Full-time equivalent jobs | -94,303 | -292,648 |
SOURCE: The Tax Foundation
The tariffs affect a broad swath of goods besides solar inverters. Solar tariffs were already "at a higher rate than lots of the other tariffs that have been imposed," despite a broad exclusion for the first gigawatt purchased, York said. The solar industry faced 30% tariffs on Chinese imports on top of the Section 201 provision to the Trade Act that the Trump administration enacted in January.
"This does not impact the overall solar demand," Credit Suisse's Mandloi told Utility Dive. "It probably helps some companies who were not exposed to China or have manufacturing outside of China [...] on a case by case basis."
The Section 201 tariff imposed by the Trump administration had spurred a production boost in the U.S. solar industry, but a Bloomberg analysis earlier this summer said the growth in domestic capacity may not lead to significant job creation.