Is the Solar Tariff Designed to Protect the Fossil Fuel Industry?

The sun is still shining and solar continues to be one of the fastest growing industries in the country. According to the National Solar Jobs Census, in less than a decade employment in the solar industry has increased approximately 178 percent (Rizzo, 2018). Despite this growth, last week Trump announced that he would be slapping a 30 percent tariff on imported solar-energy cells and panels (Rizzo, 2018). This announcement comes after several other tough blows to the country’s environmental policy efforts, including the President’s withdrawal from the Paris Climate Accord and a recent roll back on offshore drilling regulations. The common goal that binds these policy-making decisions together is Trump’s “America First” mentality, which has the primary objective of bringing manufacturing jobs back to the U.S. While the solar tariff is beneficial for U.S. based solar panel manufacturing companies who are struggling to compete with foreign rivals, an examination of the relevant stakeholders in the solar industry reveals that the President’s policy fails to satisfy most of their economic needs. In this paper, I will complete three stakeholder analyses, which include assessing each stakeholder’s power, attitude, proximity and interest associated with the issue, to demonstrate that Trump’s policy is more about cushioning the fossil fuel industry than it’s about protecting American manufacturing jobs.

The most obvious beneficiaries of the President’s solar tariff are Suniva and SolarWorld, two solar panel manufacturing companies with largescale operations based out of the U.S. (Schlesinger and Ailworth, 2018). In looking at these companies’ power associated with implementing the solar tariff, they theoretically should have little influence over such a policy. With less than 5 percent of the market share of solar panels used in the U.S., they constitute a very small market share of the industry (Swanson and Plumer, 2018). However, as two of the largest solar panel manufacturing companies in the country, they represent the perfect archetype of the businesses Trump wants to support. In examining the companies’ attitude towards the solar tariff, they are in strong support of the new policy. In fact, they filed the original petition which aimed to reduce the economic advantage of foreign manufacturing companies (Schlesinger and Ailworth, 2018). In terms of proximity, Suniva and SolarWorld are observably close to the issue as the solar tariff will enable them to compete in the U.S. and pull themselves out of bankruptcy, and as a result, their interest in the issue is very strong.

The next group of stakeholders embody a diverse group of actors who range from solar installers to manufacturers of solar-related products. While they all serve different purposes within the industry, they share a common frustration that the solar tariff will effectively reduce overall demand for solar installations. Although domestic solar-manufacturing companies like Suniva and SolarWorld will surely benefit from the solar tariff, “far more workers are employed in areas that underpin the use of solar technology, such as making steel racks that angle the panels toward the sun” (Swanson and Plumer, 2018).  According to the SEIA (Solar Energy Industries Association), only 2,000 of the 260,000 solar-related jobs in the U.S. are related to making solar cells and modules (Swanson and Plumer, 2018). Since these companies and workers encompass a clear majority of manufacturing jobs in the solar industry, they should presumably hold a great deal of power and influence over the implementation of the solar tariff. However, despite their large market share, this group has proven to have little influence over the newly implemented policy. The attitude of these stakeholders is one of opposition, as their livelihood is largely rooted in the cost-effectiveness of solar panels. The SEIA has estimated that the tariff could cost the U.S. approximately 23,000 jobs, validating the concerns of this large group of American workers (Rizzo, 2018). Thus, the group is very close to the issue and is therefore interested in how the policy will play out in the future.

The final stakeholder this paper will examine is President Donald Trump. In considering the President’s power in relation to the solar tariff, it’s clear that he has a great deal of influence due to his executive powers and ability to pass legislation in the Republican-majority Congress. Given that the implementation of the tariff was championed by Trump himself, his attitude towards the trade barrier is one of support. After the news of the solar tariff became public, the President stated that his “action today helps to create jobs in America for Americans” (Swanson and Plumer, 2018). While the solar tariff will save some American manufacturing jobs, industry experts indicate that the tariff will simultaneously put thousands of Americans out of work (Swanson and Plumer, 2018).  Thus, if the solar tariff will cost the U.S. more manufacturing jobs than it will save, why has the President introduced this policy? Well, it’s possible the tariff is simply a strategy to protect the fossil fuel industry (Smith, 2018). It is estimated that “the tariffs will increase the cost of utility-scale solar projects by about 10 percent and residential systems by just 3 percent.” (Swanson and Plumer, 2018). Therefore, residential solar might not be greatly compromised by the solar tariff, however, large utility companies that must meet their bottom-lines will likely be steered away from investing in solar energy (Swanson and Plumer, 2018). As President, Trump’s proximity to the solar industry is rather distant, yet his interest in changing the trajectory of the energy industry has proven to be strong.

There is almost unanimous agreement that the recent solar tariff will cost U.S. workers thousands of manufacturing jobs. That said, it’s also largely believed that this tariff is simply a “bump in the road” for the solar industry, as the price of solar modules has continued to drop for the past decade (Smith, 2018). While Trump claims that the solar tariff is part of his plan to bring jobs back to America, an analysis of the various stakeholders in this case suggests instead, that that the President is likely utilizing the tariff to protect the future of the fossil fuel industry.

Bibliography

Rizzo, Salvador. 2018. “Trump Says Solar Tariff Will Create ‘a Lot of Jobs.’ But It Could Wipe out Many More.” Washington Post. https://www.washingtonpost.com/news/fact-checker/wp/2018/01/29/trump-says-solar-tariff-will-create-a-lot-of-jobs-but-it-could-wipe-out-many-more/ (March 13, 2018).

Schlesinger, Jacob M., and Erin Ailworth. 2018. “U.S. Imposes New Tariffs, Ramping Up ‘America First’ Trade Policy.” Wall Street Journal. https://www.wsj.com/articles/u-s-imposes-trade-tariffs-signaling-tougher-line-on-china-1516658821 (March 13, 2018).

Smith, Noah. 2018. “Trump’s Solar Tariff Is Bad, But Not a Huge Deal.” Bloomberg.com. https://www.bloomberg.com/view/articles/2018-01-24/trump-s-solar-tariff-is-bad-but-not-a-huge-deal (March 13, 2018).

Swanson, Ana, and Brad Plumer. 2018. “Trump’s Solar Tariffs Are Clouding the Industry’s Future.” The New York Times. https://www.nytimes.com/2018/01/23/us/politics/trump-solar-tariffs.html (March 13, 2018).