Checking in on the U.S. solar tariff in 2020

In February 2018, the Trump Administration's tariffs on imported solar goods went into effect. Now, two years on, the US International Trade Commission (US ITC) just released its mid-term review of the impact of the solar tariffs. Pulling from that report, a study from the Solar Energy Industries Association (SEIA), and an analysis of our data, here's a look at how the tariffs have impacted solar shoppers and solar jobs over the last two years.

In 2017, two American solar panel manufacturers initiated a proceeding in front of the US ITC (not to be confused with the other ITC – the investment tax credit, one of the best incentives for solar). Ultimately, in September of that year, the US ITC ruled that the availability of low-cost solar goods–specifically solar cells and modules, i.e., solar panels–caused harm to the success of domestic solar panel manufacturers.

This finding of "injury" to the domestic industry allowed the Administration to levy tariffs against imported solar products, which they finalized in January 2018 to go into effect in February 2018. The tariffs began at 30% and were designed to last four years, declining five percentage points per year (i.e., to a 25% tariff in year two). The tariffs impact imported crystalline silicon solar cells and panels from all major solar panel producers other than India, except 2.5 gigawatts of imported solar cells for domestic panel production.

Before the tariffs even went into effect, the US solar industry began increasing prices to solar shoppers, bracing itself for the impact of the tariffs. In our 2017 Installer Survey, two-thirds of respondents indicated they would raise prices to consumers at least partially to cover the costs of the tariffs. According to EnergySage data, this dynamic played out quickly: quoted solar prices to consumers increased immediately after the US ITC found injury to the domestic solar industry and remained artificially elevated through at least the following June.

Over those first nine months after the US ITC ruling, solar prices increased by an average of $0.16 per Watt, adding about $1,000 in costs to an average solar shopper. Across all residential solar installations from October 2017 through June 2018, the price increase due to the tariffs resulted in a quarter billion dollar tax on American solar shoppers.

In 2018, the Solar Energy Industries Association published a study analyzing the impact of the Section 201 tariffs on the growth of the solar industry in the US. The findings are bleak: although a few solar panel manufacturers invested in additional manufacturing capacity in the US, the tariffs resulted in 62,000 lost solar jobs and $19 billion in lost solar investments from an industry-wide perspective.

The study found that the tariffs contributed to solar prices in the US being 50% higher than in the rest of the world, causing the industry to nix the development of enough solar capacity to have powered nearly 2 million homes. Importantly, SEIA points out that it's not just the economy that has been adversely impacted: America's progress on reducing carbon emissions has also been negatively affected by the tariffs, with the lost solar development enough to have effectively reduced the emissions of 5.5 million cars.

Earlier this month, the US ITC released its midterm review of the impact of the 201 tariffs (be forewarned: this link opens as a ~500-page pdf). The tariffs were designed to boost domestic manufacturing of both crystalline silicon solar cells and modules. However, according to the US ITC's report, imports of solar cells and panels have increased since the tariffs went into effect. The domestic production of solar cells has decreased (and nearly disappeared entirely), while domestic module production did experience a recent uptick in production and jobs after years of decline.

Overall, the US ITC's midterm review of the impact of the solar tariffs finds that the tariffs have increased costs to solar shoppers by inflating costs for an increasing volume of imported solar goods while effectively only resulting in a slight increase in domestic module production and employment.

Since the Section 201 tariffs were initially announced, several international solar panel manufacturers have invested in solar manufacturing capacity in the US: Jinko, LG, Hanwha, and Silfab, to name a few. Although the country's solar panel manufacturing capacity remains small compared to other countries, these manufacturers have contributed to solar jobs everywhere, from Florida, Alabama, Georgia, and Washington. If you're interested in purchasing solar panels made in these facilities, register today for a free account on the EnergySage Marketplace, and indicate your preference for American-made solar panels.