If President Trump imposes tariffs on foreign solar imports, Rondre Tompkins could lose his job as a solar installer at McCarthy.
That's because the tariffs — pushed by two U.S.-based solar manufacturers, Suniva and SolarWorld — could severely cripple the U.S. solar supply chain.
"We just had a pay cut and a couple people laid off because of this going on," Tompkins told Supply Chain Dive. "If I lose my job in solar, it will be extremely hard for me to find another job in solar, because other companies will probably be doing the same thing."
The case for solar tariffs
It's a complicated story: Suniva (a U.S.-based manufacturer of solar cells and modules in which the Chinese have a majority stake) and SolarWorld (a German-owned but U.S.-based manufacturer of solar panels) filed for bankruptcy and insolvency earlier this year, then in April Suniva accused Chinese solar manufacturers of stamping out the competition and pushing them into debt, and asked the International Trade Commission to impose global tariffs under the Section 201 global safeguard measure.
SolarWorld joined the petition a month later.
In one respect, it's old news: SolarWorld went after Chinese solar manufacturers in 2011 and 2015, accusing them of suppressing competition and convincing the ITC to slap Chinese and Taiwanese imports with tariffs in 2014.
What's new is now Suniva and SolarWorld are asking for global tariffs plus a floor price and quotas, because Chinese solar manufacturers started building factories in other countries and shipping to the U.S.
Suniva and SolarWorld want declining tariffs starting at $0.25/watt for solar cells and $0.32/watt for solar modules to be imposed on foreign imports of solar materials, claiming that said tariffs would protect American manufacturing.
The tariff on solar modules would fall to $0.29/watt in four years, but Suniva also wants a declining floor price on solar modules starting at $0.74/watt that would fall to $0.64/watt over a four-year period, and SolarWorld wants 0.22 GW quotas on imported cells and 0.72 GW quotas on imported modules in 2018.
They made their final public comments at the hearing December 6, and now await Trump to hand down a final decision in January.
But other industry leaders are pushing back.
Tariffs could hurt U.S. companies
At the hearing, representatives from the Solar Energy Industries Association told the office of the U.S. Trade Representative that tariffs would prevent the proper quantity and quality of solar materials from entering the U.S., thus shortchanging the solar supply chain and slowing solar installation.
Lack of materials will lead to lack of business, which will lead to critical job losses, they said.
"It is an incontrovertible fact that any trade relief that increases the cost of modules or restricts available supply will lead to net job losses," said Craig Cornelius, president of NRG Renewables. "The demand for new solar projects is highly elastic, and as a result, so is the demand for solar modules."
Essentially, tariffs would make it extremely difficult for installers and smaller businesses to stay open. The cost of going solar would rise, even though going solar usually saves you money.
According to David Bywater, CEO of Vivint Solar, a residential solar installation company, both utility- and residential-scale solar will suffer in the U.S.
"Over the past five years, declining costs have expanded the number of states in which it is economically viable for homeowners to go solar," he said. "This has allowed us to expand our operations, creating new and well-paying jobs throughout the United States. The tariffs that the petitioners propose threaten to erase this progress by increasing costs and, in return, decimating both expected savings and overall demand."
It is an incontrovertible fact that any trade relief that increases the cost of modules or restricts available supply will lead to net job losses.
Craig Cornelius
President of NRG Renewables
The issue is complicated because even though Suniva and SolarWorld are U.S.-based and employ American workers, the Chinese own a majority stake in Suniva and SolarWorld is owned by a German parent company, which means that if Trump protects them with trade duties, he wouldn't really protecting American manufacturing, he'd just be protecting one piece of the solar supply chain.
To appease all parties involved, SEIA suggested a softer option: impose an import licensing fee. Suniva and SolarWorld haven't rejected that option, and other companies along the solar supply chain support it because they believe it will help them stay in business and expand solar use in the U.S.
B. Scott Canada, vice president of Renewable Energy at McCarthy, said sales have dropped in half since the solar trade case began.
"Essentially we’ve had to walk away from millions of dollars of work," he told Supply Chain Dive. "From a supply chain perspective, if this tariff is heavy, we expect sales to be down next year."
Canada said it would take 18-24 months to recover from a tariff hit, and said the licensing fee was a more "attractive" solution.
"We've had tens of thousands of jobs we’ve created through solar, and there are 290,000 jobs associated with solar, and we’re trying to protect 400 jobs with the tariffs," he said.
Who benefits when global supply chains are targeted?
To Constantino Nicolaou, CEO of PanelClaw, the tariffs fly directly in the face of Trump's "America First" policy, which is why he hopes Trump won't impose the tariffs.
"Panels are just one part of solar manufacturing," he said. "When the volume of solar panels stalls and decreases because tariffs are imposed, that means the fasteners will decrease, which means solar manufacturing will decrease. If SolarWorld and Suniva get what they’re asking for, that will cost the U.S. 88,000 jobs in the solar sector. Those are very real numbers."
If the tariffs aren't imposed, Suniva and SolarWorld could go out of business, but the U.S. solar industry wouldn't take quite the same hit because the solar supply chain doesn't rely entirely on U.S.-based manufacturers. As the case stands, the U.S. solar industry's fate now lies with Trump.
For many in the solar industry, the tariff decision could be an indicator for whether they'll lose their jobs. Tompkins, for one, hopes the tariffs get nixed — not necessarily because he believes the U.S. needs to go solar as quickly as possible, but because he wants to keep his job.
"It would be unfortunate to lose a job so close to Christmas," he told Supply Chain Dive.
