We are inching ever closer to a firm decision on the fate of tariffs on imported solar cells and panels. In September, the U.S. International Trade Commission unanimously agreed that imports of these goods from certain countries cause serious harm to the domestic manufacturing industry. Then on October 31, ITC Commissioners made specific recommendations to remedy this harm. Commissioner recommendations varied but generally included ~30% tariffs on solar cells and modules from Mexico and South Korea after a certain volume (quota) has been imported. (China and Taiwan already face duties on modules and cells.) Last Friday, the ITC formally filed its recommendations with the President. The White House now has 60 days to evaluate the ITC’s recommendations and decide how to move forward.
So what is the potential impact of the President’s decision? First, we can expect imported panels from Singapore to increase since they may not be affected by tariffs. This is similar to the benefit other countries gained when China and Taiwan faced tariffs in 2012 and 2015. But the number of countries offering duty-free modules would clearly shrink and most of the recommended quotas would be easily met by demand. So let’s run the numbers assuming a 30% increase in module prices and a current price of $0.50/watt for a module.
Total Installed Solar Costs
|Current (1)||New||% Increase|
|Total Installed Costs||Residential||$2.80||$2.95||5.4%|
As you can see, the residential sector would be least affected, but impacts to commercial and especially utility-scale solar could be significant. Smaller solar companies without the storage capacity to keep modules on hand had been benefiting from just-in-time purchasing and delivery of panels with falling costs over time. But now that table has been turned and larger companies with storage space may benefit from older stockpiles of panels that cost less than new modules. And there will likely be ripple effects across the industry as a whole that are difficult to predict, including whether tariffs will do more good than harm to both U.S. solar manufacturing and the broader solar sector as a whole.