The solar industry is worried that the US government is on the cusp of starting a trade war with China after it came to light the US is putting a tariff on certain solar panels.
The U.S. government decided to slap a 2.5% tariff on solar panels because they contain certain electronic componets. The government deemed the panels to be electric generators. The ruling was made in January, but only gained widespread attention after the Times reported it this week:
The issue began with a short letter to United States customs officials last December from the small American subsidiary of a Spanish energy company. The subsidiary, GES USA, wanted to know what the tariff would be to import certain solar panels from China.
On Jan. 9, the customs agency wrote back that the panels had become too sophisticated to qualify for duty-free import. Instead — because the panels contain a basic electronic device for safety and energy efficiency — they would be treated as electric generators, subject to a duty of 2.5 per cent.
Since then, the bill for the tariff grew to $70 million, says the Times.
While this tariff is small compared to the 35% tariff planned for tires, it’s enough to have solar makers worried about a trade war breaking out:
Reuters: “We’re taking it very seriously and we will be responding. … The industry is in the process of preparing a challenge,” said Rhone Resch, president of the Solar Energy Industries Association, whose members include both U.S. and foreign solar energy companies.
For now though, the effect of the tariff is unknown. It’s so small in comparison to some of the benefits, J.P. Morgan analyst Christopher Blansett tells Reuters, that it might not matter:
The tariff could prompt more Chinese companies to set up some sort of U.S. operations. But it also could backfire on the United State if it encourages other countries to hike duties on climate-friendly goods.
…But the tariffs should not have a large impact, since the benefits that foreign governments give to companies to set up manufacturing in their country — such as lower corporate tax rates and low-cost financing — “far outweigh the penalty of a 2.5 per cent tariff,” Blansett said.
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