Obama administration's proposed tariff on Chinese solar panels raises fear of trade war

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Published June 04, 2012

| FoxNews.com

The Obama administration, still smarting from controversial investments in solar power firms like the now bankrupt Solyndra, has sparked fears of a trade war between the U.S. and China, as the Commerce Department signals it will likely slap a 31 percent tariff on all solar panel imports from China.

While some, frustrated by the high U.S. unemployment, want punishment doled out to China, others say protectionism only hurts the consumers who are forced to pay more.

Such a tariff has been pushed by companies that manufacture solar panels in the U.S., including Solar World, which has a plant in Hillsboro, Ore. 

“It’ll basically allow us to compete on technology,” Solar World president Gordon Brinser said, “just like everybody else in any other industry.”

Solar World and others have seen their market share plummet as sales of inexpensive Chinese panels have skyrocketed. The Commerce Department found Chinese companies are guilty of dumping panels on average 31 percent below fair market value.

It’s a charge China’s Suntech, the world’s largest solar company, rejects.

“The way the costs have come down so much and become so competitive is we’ve globalized,” Suntech’s chief commercial officer, Andrew Beebe, said. “We manufacture in China, we manufacture in Japan, we manufacture in the United States.”

While still a tiny piece of America’s energy portfolio, the solar industry has seen substantial growth as the price of panels has fallen. The Interstate Renewable Energy Council’s most recent annual report says solar-generating capacity in 2010 quadrupled in the utility sector and went up 60 percent in residential in just one year.

But many U.S. solar companies that don’t make panels fear the tariff will drive prices so high, consumers will stop buying. Jigar Shah, president of the Coalition for Affordable Solar Energy, said manufacturing panels account for a mere 3 percent of the 100,000 U.S. jobs tied to the solar industry.

“The U.S. now is becoming one of the fastest-growing markets in the world, and this just puts a headwind on that,” Shah said.

The Brattle Group did a study for the coalition that predicted a 50 percent tariff would cost the U.S. 14,000 solar industry jobs. Manufacturers would initially see a small increase in employment, but as sales slowed, engineering and installation jobs would suffer.

Critics of the tariff also point to massive government subsidies given to solar companies in the U.S.

Solyndra received a $530 million government loan in the stimulus package only to later file for bankruptcy. Solar World has reportedly received close to $100 million in state and federal tax breaks. Some states, like Washington, pay residents a premium per kilowatt hour rebate if they buy from the two instate manufacturers. Last year the rebate cost Washington state taxpayers $1 million.

The tariff is not a done deal yet. Commerce is scheduled to come out with a final ruling later this year, and then President Obama will weigh in.

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