If you’re looking for a trade-war headline, Donald Trump’s 30% tariff on solar imports will do the job. At a glance, the administration’s move appears to favor U.S. companies over foreign ones that produce panels at cheaper prices. Trump used a similar pitch to get elected.
However, the story is far more complicated. We saw a similar thing happen in January 2018 with the high volume of layoffs following the GOP tax plan’s passing. But big corporations loved the concept of that law.
In the case of the solar panel tax, opposition from the industry (and both political parties) came swiftly. According to the Solar Energy Industries Association (SEIA), Trump’s move could cost tens of thousands of jobs — many of them in manufacturing — in a single year. Meanwhile, Republicans in Congress joined their Democratic colleagues in denouncing the move.
Here’s what the Trump administration did and why things look bad for a rapidly growing U.S. industry.
1. Trump’s tariff
The move by the Trump administration followed a complaint file by two failed manufacturers of solar panel — both of which have their headquarters in foreign countries. These companies, which claimed cheap imported materials used in assembly hurt their U.S. operations, hoped to level the playing field by taxing foreign goods.
Once the decision was announced, one of the two companies behind the complaint did not sound convinced it would work. “We are still reviewing these remedies, and are hopeful they will be enough to address the import surge and to rebuild solar manufacturing in the U.S.,” said Juergen Stein, president of Germany’s SolarWorld America.
Next: But 23,000 American workers could lose their jobs in 2018.
2. SEIA estimates 23,000 U.S. jobs could be lost.
Because U.S. solar companies source inexpensive materials from abroad, the majority of the business comes in service and installation. Breaking up the supply chain “would will result in the delay or cancellation of billions of dollars in solar investments,” SEIA said.
In terms of hard employment figures, the number was staggering. “The decision effectively will cause the loss of roughly 23,000 American jobs this year,” SEIA said in a statement.
Next: Job losses would be devastating because manufacturing is not America’s strength in solar.
3. Trump’s move protects only 2,000 U.S. workers.
Only a tiny fraction of the workforce actually manufactures the cells and panels. According to data from trade groups, there are currently 260,000 Americans employed in the solar industry. (That number is higher than coal and natural gas workers.)
Yet only 2,000 of those jobs involve the manufacturing of cells and panels. So the move by the Trump administration protects a small minority of workers.
Next: Solar industry CEOs responded in largely negative terms.
4. ‘There’s no doubt this decision will hurt U.S. manufacturing.’
What about the American companies the Trump administration hoped to protect? Right off the bat, SunPower said it would halt its $20 million factory expansion and put plans to hire hundreds of people on hold. Other industry executives denounced the move just as forcefully.
“It boggles my mind that this president — any president, really — would voluntarily choose to damage one of the fastest-growing segments of our economy,” said Tony Clifford, chief development officer at Standard Solar. Clifford described the move as a “taxpayer bailout [of] foreign, bankrupt companies.”
“There’s no doubt this decision will hurt U.S. manufacturing, not help it,” said Bill Vietas, president of RBI Solar in Cincinnati.
Costa Nicolaou, president and CEO of PanelClaw, a Massachusetts-based racking company, also questioned Trump’s support for foreign corporations. “What’s most disappointing is that the president sided with two foreign-owned companies and didn’t listen to Americans from across the country and political spectrum.”
Next: Even higher tariffs on washing machines
5. Trump approved 50% tariffs on washing machines, too.
Along with the solar panel tariff, the Trump administration approved 50% tariffs on imported washing machines and parts, the Los Angeles Times reported. This move was seen by some as a giveaway to Whirlpool. Chairman Jeff M. Fettig said it would “result in new manufacturing jobs in Ohio, Kentucky, South Carolina and Tennessee.” Yet Whirlpool committed to add just 200 jobs.
Meanwhile, Samsung and LG employees in South Carolina and Tennessee braced themselves for what could be layoffs in the near future. “Today’s announcement is a great loss for American consumers and workers,” Samsung said in a statement.
Next: Here’s how consumers will take the hit.
6. Higher prices for consumers
If a few thousand workers get protection, is it worth losing thousands of other jobs and raising prices for consumers? The tariffs could very well make all that happen. Samsung officials described the move as “a tax on every consumer who wants to buy a washing machine. Everyone will pay more, with fewer choices,” the Times reported.
LG said it would immediately raise prices. “As a result of the trade situation, we will be initiating pricing actions,” Thomas Yoon, executive vice president at LG, told retailers on January 24. Higher prices on solar panels will also force companies to hike installation costs for consumers.
Next: Democrats and Republicans alike questioned the move.
7. Bipartisan opposition to the tariff
Republicans and Democrats have a hard time agreeing these days, but news of Trump tariff brought both sides together. The conservative Heritage Foundation released a statement saying, “We believe that trade policy … should not be about tipping the scale toward one American industry or interest group over another,” The Washington Post reported.
Senator Ben Sasse (R-Nebraska), was more blunt. “Here’s something Republicans used to understand: Tariffs are taxes on families,” Sasse said. “Moms and dads shopping on a budget for a new washing machine will pay for this — not big companies.”
The National Resources Defense Council (NRDC) saw equal losses for the economy and environment, the Times reported. “Higher-priced panels will dramatically reduce the pace of new solar energy installations, increase climate-changing emissions, and lead to significant job losses nationwide,” an NRDC statement said.
Next: Financial analysts also say it won’t help U.S. manufacturing.
8. “Anyone expecting a manufacturing renaissance [will] be disappointed.”
Hugh Bromley, a solar industry analyst at Bloomberg New Energy Finance, also had little positive to say on the topic. “Anyone expecting a U.S. manufacturing renaissance as a result of these tariffs is set to be disappointed,” Bromley said, the Post reported.
Chad Bown, a trade expert at the Peterson Institute, also expressed reservations. “There’s a real chance that this opens the floodgates,” Brown said. What he meant was, Trump is officially crowning winners and losers. If you happen to know someone in the White House, you might become a winner. Those who don’t could end up on the losing end of the next tariff.
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