2018 Vermont Law Top 10 Environmental Watch List

Solar Trade Tariffs

Solar photovoltaic energy is the leading source for new electric generating capacity in the United States and new job creation. In 2016, the U.S. added over 11 gigawatts of solar capacity. The solar industry employs more than 260,000 American workers and generates one in every 50 new U.S. jobs. In the next decade, the solar industry will need 11.5 million more workers, making it the largest single driver of U.S. job growth.

Solar Trade and Tariffs

Click on the photo to watch a video on this issue with article co-author Scott Rowland.

However, a Section 201 trade petition filed by solar panel manufacturers, Georgia-based Suniva and Oregon-based SolarWorld, could reverse the industry’s promising environmental and economic trajectory. It is likely that by late January, President Trump will impose tariffs on imported solar panels and solar cells. The effects will be dramatic: increased project costs, crippled growth, and industry-wide layoffs. In 2018 alone, an estimated 88,000 jobs will be lost and annual installations will drop by 2 gigawatts.

The trigger for Section 201 tariffs is unusual among trade remedies. Tariffs typically target specific countries accused of exporting products at artificially low prices. In contrast, a Section 201 tariff requires no demonstration of unfair trade practices. Instead the tariff provides an industry with relief, lasting up to four years, from international competition when a glut of imports suppresses domestic prices.[1]

Imposing a Section 201 tariff is a lengthy process starting at the U.S. International Trade Commission (ITC) and concluding with a presidential decision. After receiving a petition, the ITC determines if the petitioners represent the entire industry’s interests. On May 23, 2017, the ITC concluded Suniva satisfied this burden. The next step is to determine whether the imports cause or threaten “serious injury” to the industry. At this stage, Suniva and SolarWorld had to establish that increases in imports were the sole cause for injury; however, tariff opponents argued that Suniva and SolarWorld’s financial mismanagement was the real cause of injury. On Sept. 22, 2017, the ITC sided with SolarWorld and Suniva, finding that U.S. solar panel manufacturers had suffered injury.

After finding injury, the ITC moves to determining the appropriate remedy. On Oct. 31, 2017, ITC commissioners published their recommendations. The recommendations favored imposing a tariff but varied in their proposed rate and whether to impose an import quota. Three commissioners recommended four-year tariffs for photovoltaic cells and assembled solar panels. For photovoltaic cells, a 30 percent tariff would be imposed after reaching annual import quotas. For assembled solar panels, a 35 percent tariff would be imposed on all imports. Over four years, annual tariff rates would gradually decrease while in-quota levels for photovoltaic cells would rise. Another commissioner proposed setting an 8.9 gigawatt cap on all photovoltaic cells and panel imports, increasing by 1.4 gigawatts each year for four years.

On Nov. 13, 2017, the ITC triggered the statutory 60-day decision period by delivering its report and recommendations to the president. On Nov. 27, 2017, Trump’s U.S. Trade Representatives requested additional information from the ITC, extending the final decision date to Jan. 26, 2018. Trump has few constraints in setting the tariff. He must consider the ITC’s advice, but he is not required to follow it, he must consider the national economic interest, and the tariff cannot last longer than four years.[2]

Trump has already signaled that he intends to impose a tariff. In response, solar developers have begun stockpiling solar panels, causing prices to rise and construction delays for shovel-ready projects. Now, with economic growth and environmental benefits hanging in the balance, the solar industry and American workers wait on the president’s final determination: Will Trump support solar industry growth, or will he impose a tariff, destroying thousands of jobs and our clean-energy future?

[1] See Trade Act of 1974 § 201, 19 U.S.C. §§ 2251 (a) (1988) (originally Trade Act of 1973); see also, Tariff Act of 1930, Subtitle IV, Countervailing and Antidumping Duties (originally title VII), 19 U.S.C. § 1673 (a) (imposition of antidumping duties) (providing countervailing tariff remedies where foreign governments sell below fair value); see also, Tariff Act of 1930, Subtitle IV, Countervailing and Antidumping Duties (originally title VII), 19 U.S.C. 1671 (a) (2012) (countervailing duties imposed) (providing countervailing tariff remedies where foreign governments subsidize items for import into the U.S.).

[2] 19 U.S.C. § 2253(a)(2)(A); 19 U.S.C. § 2253(a)(2)(F); 19 U.S.C. § 2253(e)(1)(A).