Solar panels imported primarily from China and S. Korea will bear the brunt of the new tariffs as those countries account for more than 40% of solar panels that are purchased within the US. The tariffs will start at 30% this year and decrease 5 percentage points per year ultimately terminating in 2022. Utility and commercial scale solar projects will be hit the hardest by the tariff, but I think the residential solar market will feel far less of an impact. Equipment costs on a home project are a lower percentage of the total project cost than say that of a large scale solar farm. However, as a result of the tariff I do anticipate CA residential solar prices to increase an average of $1,100 per home as soon as March 1st.
Of course US based solar manufacturers like Solar World are thrilled. Juergen Stein, CEO of SolarWorld, enthusiastically responded to the tariff, “SolarWorld appreciates the hard work of President Trump and his recognition of the importance of solar manufacturing to America’s economic and national security.”
Economic and national security? That’s funny to me because manufacturing accounts for only 15% of the nearly 300,000 solar jobs in the US. The tariff actually does the rest of us harm. On top of that, Trump has decided to exempt some countries from the tariff. Pakistan for example, which harbors more terrorists than any country in the world, is exempt. How fast did they respond to this news? They’re inviting China-based solar manufacturer Trina to set up shop immediately.
I do suspect as news of this tariff trickles down that more of my clients will be asking, “Does it make sense now to invest in American Made Solar products for my home?” My answer is “No, unless you feel compelled to buy American and you’re fully aware of the risks.” Historically, choosing domestic brand solar panels over imported ones has cost my clients an average of $2,200 more per project. Hey, we’re proud Americans and I applaud those homeowners that spend a little more to buy ‘Made in America’. Too often though, homeowners are completely unaware of the financial stability of those US made manufacturers they decide to invest in. I’ve always recommended to my clients before their purchase to do a little research on solar equipment companies they are considering like Enphase, SolarWorld, SunPower, and Suniva. In addition, review those solar installers that champion US made brands knowing full well that the equipment they are selling may not be around much longer if it’s from a manufacturer in the red. Here's just one example:
What happens when what you thought was a 25 year solar equipment warranty is from a brand you invested in that goes belly up? Your solar installer isn’t on the hook, you are! Too many US manufacturers have been unable to furnish even one single quarterly profit to shareholders and it’s not solely a result of lower priced competing imports from Asia.
I suspect the tariff will enable those companies to make some gains temporarily but by no means do I think this is a game changer. Long term, I fear for these US manufacturers and homeowners that willingly invest in them. A 25 year solar panel warranty is worth zero if it’s written on paper printed by a company that’s no longer in business. I hope the Trump tariff serves as a life preserver for a few of those US solar companies without consequences for the rest of us. I fear though the end result will be a temporary boost in the short term for a few companies but overall we’ll realize slower job growth within the US solar sector. SEIA predicts the new tariff could result in 23,000 less solar jobs in 2018. Luckily, at West Coast Solar we’ve secured a large inventory of solar panels ahead of the tariff and our clients won’t be affected by price increases until hopefully April 2018. I do have another question. Will this tariff spark an even broader trade war with China?