U S. trade officials on Friday empowered President Trump to impose tariffs that could cut off the solar energy industry from the cheap foreign-made panels that have driven its explosive growth and helped create tens of thousands of jobs in California.
The tariffs under consideration are meant to protect a small number of American solar-panel manufacturers reeling in the face of cheap imports. The U.S. International Trade Commission voted to enable Trump to impose them at the behest of two distressed firms that warned the American panel manufacturing industry is in a state of collapse.
The commission ruled that the cheap foreign panels are "being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or threat of serious injury, to the domestic industry."
But most of the solar industry fiercely opposes the levies, which independent analysts warn would drive up consumer prices and cause the number of annual solar installations in the U.S. to plunge. Only a fraction of American solar companies make the panels. Most rely on imports to keep prices competitive with other forms of electricity. More than 90% of solar installations in the U.S. use imported panels.
Some 16,000 California jobs could disappear if the heavy tariffs being sought by the distressed manufacturers are imposed, according to an estimate from the Solar Energy Industries Assn. That is more than a quarter of the solar jobs in California. Nationwide, the association projects 88,000 jobs would vanish.
The governors of Nevada, Colorado, Massachusetts and North Carolina had implored the trade commission not to authorize tariffs in a last-ditch lobbying effort Thursday. Their letter warned of a "devastating blow on our states' solar industries" and "unprecedented job loss, at steep cost to our states' economies." In California, which would get hit with more job losses than any state, the governor's office has also been closely watching the situation.
Congress also weighed in, with 69 Republicans and Democrats urging commissioners against greenlighting the tariffs. Several think tanks on the right that have long tangled with the solar industry also lobbied against the tariffs, warning they would be an affront to free trade.
Now the matter is in Trump's hands. The president has been eager to use tariffs in a bid to revive flagging U.S. manufacturing industries, and the commission vote will test his resolve as a protectionist. The White House was noncommittal following the 4-0 vote at the commission. "The President will examine the facts and make a determination that reflects the best interests of the United States," said its statement. But the White House signaled it sympathizes with the distressed companies, saying their corner of the solar industry "contributes to our energy security and economic prosperity."
Commissioners will take the next few weeks to consider how steep the tariffs should be and make a recommendation to the White House. Trump is not obligated to follow their advice.
Solar companies worry the administration will heed the request of the firms that brought the action and hit foreign manufacturers with a tariff that will raise the price of their panels from 35 cents per watt to 78 cents, which is around the cost of the American product.
Analysts project such a price hike would quickly cut in half the number of annual solar power systems installed in the U.S.
The action was filed by Georgia-based Suniva, a firm that is in bankruptcy. Joining Suniva in requesting the levies was Oregon-based SolarWorld Americas, a struggling subsidiary of the bankrupt German firm SolarWorld AG.
"We welcome this important step toward securing relief from a surge of imports that has idled and shuttered dozens of factories, leaving thousands of workers without jobs," said Juergen Stein, CEO and president of SolarWorld Americas. The company said 30 solar manufacturers shut down operations between 2012 and 2016 as foreign imports quintupled.
The case was filed under a rarely exercised provision of trade law called Section 201, which enables the president to broadly impose tariffs if the commission finds such a drastic move is needed to protect an American industry from a deluge of foreign imports. It hasn't been exercised since 2001, when George W. Bush invoked it in an effort to protect the U.S. steel industry from Mexican and Canadian imports. The move sparked retaliation, and the World Trade Organization ultimately voided the steel levies two years later.
Other tariffs imposed by the U.S. under the so-called "safeguard" provision being invoked in the solar case have run into trouble at the WTO. The international body applies a high standard for proving that imports actually caused the injury to domestic producers, and not other factors. Yet an appeal to the WTO would take time, and the Trump administration does not have to wait for its ruling. Officials can assess the duties immediately upon presidential action, which is expected by January.
Solar industry officials are now focusing their efforts on persuading U.S. trade officials and the White House to pursue the least disruptive "remedy" possible for addressing the grievances of Suniva and SolarWorld. That could be a negligible tariff or possibly even some other form of light sanction on the manufacturers of the cheap imports. Tom Werner, CEO of the large California-based solar firm SunPower, warned in a blog post Friday that anything else "could undermine an American industry that has been experiencing exponential growth and creating jobs at an unprecedented rate."
He expressed hope that Trump would come to see that steep tariffs would give foreign competitors an advantage, pushing innovation in the industry abroad. Others have pointed out that most of the jobs that would be lost to high tariffs belong to installers who do not need a college degree, the exact group of voters Trump is promising to help.
But the president has been eager to impose exactly the type of tariff that the commission has now put on the table to strike a symbolic blow against cheap foreign imports that have been a scourge of U.S. manufacturing jobs. He talked about invoking Section 201 during the campaign, and a trade agenda his administration presented to Congress signaled that Trump intended to be far more aggressive than his predecessors in using it to slow imports.
Anxiously awaiting the president's move are the directors of big solar projects, like utilities in the Southeast, which have plans to add more than 4,000 megawatts of solar in their region. It all adds up to a roughly $4-billion investment in the local economies, according to Stephen Smith, executive director of the Southern Alliance for Clean Energy.
"All those jobs, property values and clean energy opportunities are now at serious risk," he said.
Times staff writer Don Lee in Washington contributed to this report.
12:25 p.m.: This article was updated with reaction from the firms and additional analysis.