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Trump’s solar tariff backfires: It hits red states and U.S. taxpayers harder than China

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Think Progress

On Monday, President Donald Trump slapped a 30 percent tariff on imported solar cells and panels.

But while the White House said the goal was to punish China for an industrial policy aimed at taking over the global solar market, the harsh reality is that the president is going to end up punishing the states that voted for him the most.

On top of that, U.S. taxpayers are actually going to end up paying for half of any tariff.

Analysis provided to ThinkProgress by GTM Research concludes, “new and emerging state markets are disproportionately affected [by the new tariff], with southern states like Texas, Florida, Georgia, and South Carolina amongst the most impacted by the tariffs.”

All of those states voted for Trump in the 2016 election.

MJ Shiao, GTM’s head of Americas Research, explained in an interview that the states hurt the most by the new tariff are the “hot markets that are on the cusp of becoming economic for solar,” or that just became economic thanks to the steady and rapid price drops for solar cells and panels. Those states are disproportionately found in the South and Southeast.

In addition to punishing emerging markets in several red states, experts say the new tariff will also backfire for all U.S. taxpayers.

“The U.S. federal government will end up footing some of the bill for Trump’s decision,” Hugh Bromley, a Bloomberg New Energy Finance (BNEF) solar analyst, said in an email.
“Half of any increase in system costs will be offset through the tax code via the Investment Tax Credit and depreciation.”

In short, U.S. taxpayers will end up footing half the bill.

“The investment tax credit for solar is 30 percent of capex [capital expenditure],” Amy Grace, head of North American research for BNEF, explained — so 30 percent of any tariff-driven price increase gets paid back through the tax code.

And the tax code’s accelerated depreciation for new equipment means yet another portion of any tariff-driven price increase will, again, ultimately be paid back by U.S. taxpayers.

Will the tariff provide much benefit for U.S. solar manufacturers, which is the key rationale for imposing them in the first place?

BNEF’s Bromley says it won’t.

“Anyone expecting a U.S. manufacturing renaissance as a result of these tariffs is set to be disappointed,” he said.

“A tariff lasting only four years and ratcheting down quickly is unlikely to attract any manufacturing investment that was not going to occur anyways.”

Finally, can red state voters and U.S. taxpayers at least take some comfort knowing that China is going to suffer from all this? The answer to that is also no.

“Chinese manufacturers have aggressive cost reduction plans in place already,” Shiao said, and the U.S. is only 10 percent of the global market.

But GTM’s research finds that the tariffs will reduce U.S. installations about 10 percent over the next five years. So any overall impact on Chinese solar manufacturing and sales will be quite modest indeed.

The bottom line is that Trump’s new tariff on solar imports will have a very limited impact on China or domestic solar manufacturers, but red states will take a disproportionate share of the lost revenues and lost jobs from the reduction in U.S. solar installations — and taxpayers will end up footing much of the bill.

This, sadly, is the kind of counterproductive impact we have come to expect from Trump’s energy policies.

Source: Think Progress. Reproduced with permission.  

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  • Joe

    I saw a report on TV that China is going to take Trump / USA to the WTO and get this dumbass solar tariff removed. This could all turn ugly, into a trade war between China and USA.

    • Alistair Spong

      That’ll play nicely for trump – he plays that angle well – could be what he really wants

      • John Saint-Smith

        A warm, belly-full of self-defeating hate, to help justify pressing his bigger button…

        • Alistair Spong

          Thats an easy thing to say , fact is people voted for him in part because he convinced people who had been discarded by the political and economic elites that he was backing them – trade war -what better way to demonstrate that he gives a shit to those people

          • John Saint-Smith

            ‘discarded?’ When were the 1% ever ‘engaged’ with the peasants? All that happened was that the owners conned them to put their chains back on. And instead of resisting, the sheeple just sucked it up until the ultimate ‘entitled one’ promised to free them, but only from the truth.

            Did you know that these same Americans also believe that they have to defend themselves from their government with guns? Isn’t it time they used them on the real enemy, instead of just shooting each other? Of course the elite back the Second Amendment, 200 million guns are good for the economy, and help to keep the peasants distracted. That way they’ll never discover their power is the only real power in the land.

  • Robert Westinghouse

    This is exactly why Australia needs to be NEUTRAL. We cannot trade with China and be in the pocket of the USA. Politicians are so stupid and we all pay for their idiocy.

    • Chris Marshalk

      We need to get rid of the LNP. REAL IDIOTS!!!

      • Brunel

        The Greens need to have UBI in their manifesto.

      • John Mitchell

        I agree.

  • Chris Fraser

    A Republican voter … that seems to be a euphemism for ‘self-flagellating masochist’.

  • john

    This case was put in place by foreign owned companies in the USA for protection in one case a USA company owned by Chinese Investors.
    To say the present Administration does not have a clue is underline by this case.

  • Ken Dyer

    I keep on saying it – everything Trump touches turns to shit.

    • Joe

      ‘Shithole Presidency’ led by ‘Shithouse Prez’

      • mick

        passion fingers

  • Peter F

    If it does place pressure on Chinese manufacturers, it will mean even more competitive prices for us. Thankyou Mr. Trump

    • GlennM

      Hi Peter,
      perhaps you did not do the maths from the article. US is 10% of the Market and the tariff will decrease it 10%. 10% of 10% is an absolute of 1%. A 1% reduction does NOT place pressure on the Chinese..

      • Peter F

        Of course you are correct but sometimes prices are set at the margin so we might get the odd windfall in a few containers full of diverted panels

    • Dragor Payne Michael

      All the tariffs does is that it allows domestic factories to sell at higher prices while foreign imports can’t compete. It affects the us way more than china as more jobs would be lost from higher prices, and China still has a few significant american factories in the US, making solar anyways.

  • John Saint-Smith

    Donald ‘Canute’ Trump.

    • Joe

      Ask the Trump and his daughter Ivanka to explain where they have their ‘Trump Products’ manufactured. I saw a story about this not long ago….Made in China …..seemed to be the go.

      • Brunel

        Kevin07 t-shirts were also made in China.

        • Joe

          Yes, but it is the Trump that bangs on about “Make America Great Again”, he’s gonna bring manufacturing back to USA from Overseas / China, all that at the same time that he plays his silly anti China games…so no problem whatsoever that his family has its products bearing the label..”Made in China”

          • Brunel

            Silly anti-China games?

            Take a look at how much the Ford Mustang costs in China and India.

            China does not have elections, so it can put import taxes on American goods without saying a word – Trump had to say what he wants done in order to get elected and do to China what China does to USA/AUS/Europe.

          • Pixilico

            It’s all about making Americans gullible again.

    • Barri Mundee

      I doubt that the US is “going to be great again” with Trump’s policies. In fact the country could end up “trumped” by China. Ample historical precedents for empires rising and being eclipsed by others.

  • Robert Comerford

    This policy might have more to do with keeping the myth going that the coal field jobs will reappear once more. i.e., make renewables as expensive as you can!
    As for taking them to the WTO… Trump will just announce once again that the rules don’t apply to them.

  • Le Clair

    What about the Tariff that was imposed under Obama?
    You know, the problem with the USA is that electricity is already so cheap. At my house in Dallas, I am paying 4.99c/kWh (after rewards, discounts and promotions). There is no “service fee” which there is in Australia and NZ. I have a 4,000square foot, 5 bedroom etc etc house which is centrally heated and air conditioned with a heat pump (reverse cycle) 24/7/365. 9m x 7m pool heated to 30C 8 months of the year, electric hot water. It gets to 40C in summer, 0C in winter. My mid summer (July) electric bill was $132. Mid winter (December) was $112. I could not justify solar at a quarter of the price offered ($9,900 for a 10kW system) with bills like that and I don’t worry about emissions because it all comes from a “local” nuclear plant.
    This will be meaningless to 99% of Americans who are focused on making the best of a booming economy at the moment.

  • Brunel

    China is not the only place that makes solar panels. Nor should the US be getting all their panels from China.

  • Brian Tehan

    This is great news for Australia because the shortage of panels, created by USA importers buying up as much as they could before the tariff will end. We’ll get ample supply – at a better price now.

  • ChannelSixtyNine69

    “I Love The Poorly Educated”
    – Donald Trump, Nevada 2016 (to applause)