The U.S. International Trade Commission concluded that a flood of cheap, foreign solar panels is hurting U.S. manufacturers, teeing up an opportunity for President Donald Trump to impose tariffs and import quotas as soon as November. Shares of most solar companies fell.
The panel’s decision now threatens to upend the $29 billion U.S. solar industry. More expensive prices for cells and panels would crimp demand for solar projects that have burgeoned in the past decade. Even before the Friday vote, some developers had halted construction and begun hoarding supplies, anticipating that tariffs could double the price of imported components.
The ITC, a U.S. agency, is next set to deliver its recommendations to address the import surge to the president by Nov. 13, handing Trump an opportunity to score political points on three priorities: He can slap a tariff on China and argue he’s protecting U.S. jobs, all while undermining the economics of an industry that competes with coal.
“President Trump can remedy this injury with relief that ensures U.S. energy dominance that includes a healthy U.S. solar ecosystem and prevents China and its proxies from owning the sun,” according to a statement from Suniva Inc. emailed shortly after the commission’s 4-0 decision.
Georgia-based Suniva is driving the suit. The company filed for bankruptcy protection in April and followed up days later with the trade suit. The company is seeking import duties of 40 cents a watt for solar cells, and a floor price of 78 cents a watt for panels, which currently average about 32 cents worldwide.
The U.S. unit of SolarWorld AG, a bankrupt German panel manufacturer, joined Suniva to argue they have been hobbled by a global glut of cheap cells, an industry dominated by China. Unlike earlier trade cases, this one would apply on U.S. imports from any nation.
Chinese panel suppliers fell. JA Solar Holdings Co. slumped 5.3 percent. JinkoSolar Holding Co. fell 1.5 percent and Canadian Solar Inc., which mostly produces in China, slipped 2.4 percent. First Solar Inc. is expected to benefit from tariffs on imported panels because it uses a different technology that isn’t included in the ruling — its shares rose as much as 8.7 percent.
Most of the U.S. solar industry, which uses the cheap panels for rooftop or utility-scale projects, opposes the effort, arguing that inexpensive imports have driven a boom in U.S. solar projects and tens of thousands of jobs hang in the balance. Abigail Ross Hopper, president of the Solar Energy Industries Association, called it an “ill-conceived case” driven by creditors wanting to recover some of their investments “in poorly run companies.”
“The ITC’s decision is disappointing for nearly 9,000 U.S. solar companies and the 260,000 Americans they employ,” Hopper said in a statement. “Foreign-owned companies that brought business failures on themselves are attempting to exploit American trade laws to gain a bailout for their bad investments.”
The case is unusual — and not just because Suniva’s majority owner, Shunfeng International Clean Energy Ltd., opposes it. It also was pursued under a rarely used provision of a trade law that offers companies a “global safeguard” that can result in broad, uniform protection against imports — not just tariffs on specific countries or companies. Under that 1974 trade measure, Suniva only had to prove that imports have caused it “serious injury” — not that foreign competitors did anything unfair or illegal.
Such “global safeguard” cases were relatively popular in the 1980s and 1990s, but they fell out of favor after a string of losses. Even when the ITC sided with domestic manufacturers, presidents were often unlikely to impose a penalty.
These cases have had a resurgence under Trump, whose protectionist rhetoric may be leading companies to think he’ll support tariffs or import quotas. In addition to Suniva’s claim, the ITC has been conducting a separate global safeguard investigation of large residential washers. Still, Trump is also trying to coax the Chinese leadership into cracking down on North Korea, and so imposing tariffs may complicate that effort.
— With assistance by Chris Martin