The Trump Administration announced on January 22 that it would slap tariffs of up to 30 percent on imports of equipment used to install new solar power-generating units. The move is aimed primarily at China and South Korea, the largest suppliers of panels to the United States. By making solar power more expensive, U.S. utility, industrial, and residential consumers will be less likely to substitute solar for gas at a time when gas prices are rising. Suffice to say that this is a blow to renewable energies on a global scale.
Energy policies produce winners and losers. In this case, the winners are U.S. solar PV cell manufacturers, provided they can produce economic equivalents to Chinese panels (unlikely in the absence of subsidies). U.S. and global gas producers will also benefit from a policy that hinders the growth of U.S. solar power.
The losers are more plentiful. Besides directly hurting the solar industries of China and South Korea, U.S. workers also stand to suffer, as the solar power industry employs far more people to install new units than it does to manufacture them. Some estimates say that 23,000 U.S. jobs in the solar industry will be lost.
From installing heads of U.S. energy and environmental agencies including the Environmental Protection Agency and Department of Energy who do not believe in climate change, to withdrawing the United States from the Paris Climate Accord, Trump continues to abnegate U.S. responsibility for the global problem of a warming planet. Outside of oil and gas companies, however, U.S. business leaders have mostly denounced the Administration’s energy policies and have zero appetite for a trade war with China. China, meanwhile, has already assumed leadership in the renewables sphere. It is the world’s largest producer of solar, wind, and hydro, and is poised to do the same in nuclear. Tariffs on solar might slow but will not derail the Chinese renewable energy train.
Trump Scores Domestic Points
That being said, the tariffs on solar panels are politically savvy. They appeal to Trump’s base for obvious reasons and could appeal to those who voted for Trump halfheartedly. Trump can claim that he’s being tough on China (a daily refrain from his campaign trail that he has not lived up to), and that he is supporting U.S. manufacturing and, much more cynically, green energy. It is also worth noting that the Obama Administration levied tariffs on Chinese solar panels in 2012 and that the European Union levied similar tariffs against Chinese solar panels in September 2017.
Trump can also defend the move because it originated from U.S. solar panel manufacturers, SolarWorld and Suniva, who long claimed that Chinese imports undercut their businesses, and lodged a complaint with the U.S. International Trade Commission in 2017.
Former Democratic presidential candidate and anti-global warming-champion Al Gore even defended Trump, saying the policy is “not an utter catastrophe” because it emerged from the SolarWorld and Suniva complaints and Chinese solar panels do benefit from export subsidies. The Administration hoped to maximize news exposure by announcing the policy on a Monday, but the revelation that Trump tried to fire special prosecutor Robert Mueller last June from investigating his campaign’s ties with the Kremlin halted momentum.
Hydrocarbons vs. Renewables
It is unsurprising that Trump’s first direct blow against China on trade came in energy. He has taken active and dilatory steps to undermine the global adoption of renewable energy during his first year in office. The world is now neatly arranged into two camps battling over the future of energy: oil and gas producers versus renewables producers. OPEC countries, Russia, and hydrocarbon-producing segments of the United States, Canada, and others constitute the bulk of the first camp. China, Western Europe, and even renewables-producing sectors of the United States and Canada, are leading the other. Public opinion towards wind and solar in the United States, and across the globe for that matter, is very favorable.
While much of the press has focused on the job-killing nature of the tariffs, the more interesting question is how it will affect China. China reacted with dismay this week, saying that the move “aggravates the global trade environment,” while South Korea announced plans to file a complaint with the World Trade Organization. During the Obama tariffs, China simply shifted the focus of its marketing and distribution to developing markets in other countries, especially in Asia. China then gained deeper roots in Asian markets after Trump pulled the United States out of the Trans-Pacific Partnership (TPP) at the beginning of 2017. This makes Trump’s statement this week that he would reconsider TPP all the more confusing. If he is going to start a trade war and is serious about undermining China, TPP offers an incredible opportunity.
Gumming up the Works
Trump is truly a bewildering leader. It is unclear he has even a rudimentary grasp of the policies he chooses, or that he even cares about them. He vacillates, leaves possibilities open, and gives analysts little to work with. Even rejoining the Paris agreement is an apparent possibility based on an interview at the World Economic Forum in Davos. When asked about the accord, Trump said, “Would I go back in? Yeah, I’d go back in. I like, as you know, I like Emmanuel (Macron). I would love to, but it’s got to be a good deal for the United States.”
This is all a huge waste of time, as the clock continues to tick on a serious global issue. U.S. tariffs on Chinese solar panels are not a monumental development. China will continue to grow its production of renewable energies to clean its own environment, grow export markets for renewable energy technology, and reduce dependence on costly fossil fuel imports. Yet Trump is certainly doing his best through vacillation, obfuscation, and deliberate delaying to arrest the momentum on renewables. Fossil fuels accounted for over 85 percent of global energy consumption in 2016. We should hold him and all leaders accountable.