The tariffs could also backfire by hurting U.S. companies that supply solar manufacturing equipment and materials to China. In 2010, the value of these exports exceeded that of imported solar panels from China by hundreds of millions of dollars, according to GTM Research.
China may also retaliate by placing tariffs on U.S. silicon and equipment. If this happens, the Brattle Group guesses that this could cause job losses of up to 60,000 in the U.S. by 2014.
So in the short term, the only ones to benefit from the tariffs would be solar panel manufacturers in the U.S., which account for a small fraction of the total domestic solar industry workforce. The Brattle study concludes that the damage to installers and consumers from higher prices would far exceed the benefit to solar panel manufacturers.
However, some experts argue that over the long term, tariffs could result in lower-priced solar panels and help U.S. installers and manufacturers alike. Supporters of the tariffs make two basic arguments. The first is that without tariffs, unfair trade practices in China will drive other manufacturers out of business, reducing competition and reducing the incentive for Chinese companies to invent better solar panels. Imposing tariffs would allow more solar panel manufacturers to survive worldwide and, according to this logic, increase competition.
The other argument is that unfairly subsidizing solar panel exports makes it more difficult for companies with new technologies to break into the market. While new technologies may promise lower costs eventually, they’re typically more expensive at first. Higher prices—driven by tariffs—could make it easier for companies with new technology to become profitable.
But, of course, such tariffs would not help companies in China with innovative technologies. It’s also unclear whether the tariffs will raise prices enough for new technologies to succeed. Subsidies that create a market for solar panels—such as the feed-in tariffs in Germany—could have a greater impact, by increasing demand for solar panels. Companies such as First Solar, which developed a new kind of solar panel that doesn’t use silicon, were helped by high demand that kept prices artificially high in the mid-2000s. Melanie Hart, a policy analyst at the Center for American Progress, calls both for tariffs and for policies to increase demand.
What is certain is that continued innovation is necessary if solar power, which amounts to less than 1 percent of the U.S. electricity supply, is to become a major source of electricity. Solar panels have become much cheaper, but the cost of solar panel installations in the U.S. is still far too high to compete with fossil-fuel power plants. New technologies are needed to improve solar panel efficiency without increasing manufacturing costs. This would lower the cost per watt of solar panels and reduce installation costs because fewer panels would be needed per installation.
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