Economy Energy

Trump’s Tariffs On Solar Panels May Have Backfired

Written by SK Ashby

Trump imposed tariffs on imports of solar panels in 2017 with the presumed goal of increasing domestic production of solar panels, but things haven't exactly turned out that way.

Trump's tariffs led to job losses in the installation industry which relied on imports, but the tariffs haven't led to dramatically increased production either for reasons that are both directly and indirectly a result of Trump's incoherent policies.

Trump's tariff on imports led to a supply glut in China and, in response, China cut subsidies for their own domestic market which was overflowing with abnormally cheap panels.

China's decision to cut subsidies for installation is now lowering the cost of solar panels by increasing global supply.

“If you are building a large power plant your pricing has certainly come back at least halfway to what it was pre-tariff, if not all the way,” as SunPower Corp CEO Tom Werner told Reuters Monday. “It’s muting the impact of tariffs.”

Prices could fall up to 35 percent this year. And while that is good news for those who want to install solar panels, it undercuts the supposed goal of Trump’s tariffs — to increase domestic production.

The price drop “makes domestic manufacturing that much more challenging,” said Werner.

It may be too generous to say this is an indirect consequence of Trump's actions, but there's another factor directly under Trump's control that's depressing domestic production of solar panels.

Solar panels are held together by the same steel and aluminum that Trump has also imposed tariffs on and domestic producers are paying the price for that.

Speaking of which, Trump's tariffs on steel and aluminum without making any effort to pass an infrastructure bill has led to a very similar outcome. Trump imposed tariffs on metal in the name of increasing domestic production, but there's no demand for increased domestic production. Increasing production only adds to a global supply of metal that's as high or higher than it's ever been.

You know, I can't recall exactly what grade it was, but I think we learned about basic supply and demand in 4th or 5th grade. I don't think Trump ever learned.