How Will Tariffs on Solar Panels Affect Innovation?

The United States Commerce Department concluded today that Chinese solar panel manufacturers are dumping solar panels in the U.S., and is penalizing them by imposing a 30 percent tariff on 62 solar manufacturers in China and a general 250 percent tariff on other solar panel manufacturers in China. That’s on top of a small tariff of 2.9 to 4.73 percent it announced earlier this year.

The decision may increase solar panel prices in the U.S. and will undoubtedly have political repercussions, as China has threatened to impose retaliatory tariffs. It could also have an impact on innovation, but exactly what that impact will be less clear. 

The new tariffs could help some solar panel companies in the U.S. that are working innovative technology get to market by raising prices here. But they could also hurt U.S. companies that supply materials and equipment to manufacturers in China, as well as installers who benefit from cheap solar panels imported from China. Many of these companies are also innovating—with new technology and financing models–to bring down the cost of solar, so hurting them could slow down progress toward solar power that’s cheap enough to compete without subsidies. One prominent solar researcher with ties to Chinese companies argues that trade barriers can only hurt innovation.

We break down the issues here, in a story we ran after the smaller tariff was announced in March.

The tariff decision is preliminary and may yet be overturned later this year.