Is the gateway to the U.S. becoming blocked with tariffs on solar?

After more than 20 years of duty-free trade in solar panel imports, the U.S. Customs has decided to impose a 2.5% tariff.  What will this do to the solar industry in America, which has struggled to keep pace with European nations, like Germany and Spain.

Some people are not waiting to see what happens next.  According to Rhone Resch, the president of the Solar Energy Industries Association:

“We’re taking it very seriously and we will be responding. … The industry is in the process of preparing a challenge.”

The cost of the new tariffs and potential penalties could range over $70 million per year for U.S. importers of solar panels.  And why?  Concerns about global climate change should be easing – rather than increasing – restrictions with respect to obtaining solar energy.   And, considering the recent federal and state tax incentives which lower the cost of installing solar, why increase the tariff?  Isn’t that counter-productive?

If you are wondering what is behind the new fee, the New York Times reported last week that it may link back to a ruling by the U.S. Custom service in January that a panel made by Trina Solar of China was a generator because it contains a diode that allows electric current to pass around shaded areas of the panel.  Unusual?  No.  In fact, one industry official noted that the ruling was a surprise because:

“All solar panels contain bypass diodes and have forever. It’s a safety issue not to have them.”

Given the 35% tire tariff imposed on China several weeks ago and China’s vow to investigate U.S. poultry prices, it looks like this may be a continuation of the trade dispute between the two countries.  Or is it?  President Obama explains:

Lots of paperwork to be generated with respect to the U.S. solar tariff

So, what can the solar industry do with respect to the tariff?  Should American consumers be concerned?

The solar industry is fighting back, in fact.  Its first priority is to try to change the minds of officials at the Customs and Border Protection Headquarters.   After that, it may appeal to the U.S. Court of International Trade in New York, if necessary.

Does this mean that you should wait to install solar panels on your home?  Absolutely not!  The current rift is between the U.S. and China.  It will not dramatically (if at all) impact solar panel prices here in America.  More importantly, it will not reduce the tax incentives and rebates available nationwide.

In fact, not everyone agrees that solar panel tariffs are a bad idea.  Mike Wessel, a commissioner on the U.S.-China Economic and Security Review Commission notes:

“Customs’ decision is the right approach to ensure that the domestic industry we have does not get run further into the ground by China’s efforts to dominate this industry.”

Clearly, U.S.-China relations are strained by trade issues and the current global economy.  Yet, I believe that solar will continue to be a bright spot for consumers in the U.S. – and worldwide.  And – I have to point out – a 2.5% tariff on solar is a far cry from the 35% tire tariff which made big news a few weeks ago.

Calling on all economists and business persons… what are your thoughts on the solar panel tariffs and other aspects of the U.S.-China trade dispute?