Image: Wikimedia Commons

Energy rules and regulations get convoluted pretty fast, and many new rules cause more head-scratching than fist-pumping. But late Monday, the Trump administration made a long-awaited announcement regarding tariffs on solar panel imports, and the response was fast and furious.

In his biggest trade move since pulling out of the Trans-Pacific Partnership a year ago, President Trump announced that imported solar cells and modules would be subjected to a 30 percent tariff, which will be ratcheted down to 15 percent over four years. The decision stemmed from a request by two struggling solar manufacturers, Suniva and SolarWorld, to the U.S. International Trade Commission. While the tariff was pitched as a way to boost U.S. jobs, especially in manufacturing, many experts think it will do just the opposite. Chinese imports have helped the U.S. solar industry grow remarkably fast over the last decade, and the workforce includes many people not involved with the actual manufacture of panels, but employed in everything from installation to sales.

Advertisement

The Solar Energy Industries Association said the decision “will cause the loss of roughly 23,000 American jobs this year, including many in manufacturing, and it will result in the delay or cancellation of billions of dollars in solar investments.”

In 2016, there were over 260,000 solar workers in the U.S., according to the Solar Jobs Census, with about 1 in every 50 news jobs added in the country created by the solar industry.

Abigail Ross Hopper, SEIA’s President and CEO, said in a statement that “While tariffs in this case will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving.”

Advertisement

Hopper’s denouncement was one of countless to roll in from politicians on both sides of the aisle, businesses, industry experts, and especially foreign leaders, who have already threatened to appeal the decision to the decision to the World Trade Organization, which could lead to another decade of unease across the industry. The tariffs are primarily aimed at China, the world’s biggest solar manufacturer, but South Korea and Mexico werequick to condemn the decision, too.

Mexico’s economy ministry said the country’s government “regrets the United States’ decision not to exclude Mexico from the measures,” which also included tariffs on imported washing machines. The decision will further exacerbate any tensions over the future of the North American Free Trade Agreement (NAFTA).

Advertisement

In a statement late Monday night, China’s Commerce Ministry said the U.S. “once again abused its trade remedy measures,” and that Beijing will “resolutely defend its legitimate interests.”

Many experts are concerned the tariff could spark a wave a retaliation. Chad P. Bown, a senior fellow at the Peterson Institute for International Economics in Washington, told The Wall Street Journal that these moves could result in “skirmishes and fallout” for U.S. workers and consumers.

“This is now really starting to escalate,” Brown said. “The concern is that now we’re at a tipping point.”

Advertisement

One saving grace may be that the impact of the new tariff is ultimately limited by more powerful economic forces at work. According to Bloomberg New Energy Finance, the decision is unlikely to raise costs of imported equipment far beyond recent levels. Hugh Bromley, a New York-based analyst at BNEF, said he thinks the tariffs will increase costs for large solar farms by less than 10 percent, and that the expense of a residential system will rise by about 3 percent.

Still, based on China’s reaction to the move, it definitely isn’t clear skies ahead, especially with Trump heading to Davos at the end of the week. Traditionally a forum for global economic collaboration, attendees wait with bated breath for what tack Trump will take. He could go full-on, Stephen Miller-inspried “America First”, or he could take a somewhat more ameliorating tone. The simple fact that he is attending this elitist hubbub is confusing enough, considering his campaign platform was a feverish attack on the very principles upheld at Davos.