Are The Tariffs Really The Serious Threat They’re Made Out To Be?

Over the past several weeks, many great thinkers in the solar industry, from Solar Energy Industries Association (SEIA) President and CEO Abigail Ross Hopper to the team of stellar journalists at Canary Media, have been decrying the preliminary decision by the U.S. Department of Commerce on #solar #tariffs.

To recap, the decision essentially says that certain Chinese companies have been evading the tariffs imposed by the Trump Administration. The tariffs were designed to punish the Chinese #module companies for “dumping” modules into the U.S. market at prices below the manufacturing costs. The hope was that the tariffs would also encourage more companies to bring module #manufacturing plants to the United States.

Instead, the Chinese companies offshored their production facilities to other Southeast Asian countries like Vietnam, Malaysia, Thailand and others to evade the tariffs. Now the U.S. Department of Commerce has decided to expand the tariff regimen to include those countries in an attempt to crack down on Chinese manufacturers—and the solar industry reacted as if the sky was falling.

I’m not here to suggest the tariff decision won’t have an effect on the solar industry. It very clearly will. But I do wonder at people’s shock at the decision because, well, of course the Chinese firms were evading the tariffs. And the U.S. Department of Commerce couldn’t ignore the evidence before their eyes just to appease the solar industry.?

Before we panic, however, it’s critically important to understand what the decision says, and what the decision does not say. According to pv magazine USA , 80% of modules destined for this country come from Southeast Asia. But only four specific companies are targeted with the expanded tariffs.?

The unspoken question is how much of the U.S. module supply will actually come offline. I understand that 天合光能 , one of the sanctioned companies, is a major supplier of modules to this country. But as a percentage of the overall supply, how much do they really represent?

If someone shows me that they represent 60% of the 80% of Southeast Asian supply, I’ll be concerned. But if it’s 5%, then the threat isn’t as big a deal. Furthermore, tucked discreetly deep in the decision, is the provision that sanctioned companies can get certified that they are not circumventing the tariffs, which would allow them to continue shipping their products to this country. Does anyone think the four sanctioned companies won’t work to get certified by the time the final decision is made in May?

What concerns me more about where the modules are made is the question of where we will get the raw materials to make those modules. Even if all the modules used in the U.S. market were made here, we would still have the problem of sourcing the #silicon wafers in countries like China. Right now, according to the United States Geological Survey, China produces nearly 75% of the total amount of silicon produced in the world. The United States ranks a distant fifth—not enough to sustain a domestic module industry even under the best of circumstances. That has the potential to be a much thornier issue facing the industry, even as domestic module manufacturing ramps up.

We must, as an industry, pick our battles carefully. If this tariff threat isn’t nearly as serious as we are making it out to be, we’ll have a much harder time defending ourselves against the next threat if they feel we were alarmist this time. Let’s dig a little deeper and make sure the threat is as disastrous as it appears before we let the panic set in.