Why ITC Solar Trade Case Is Far from Over

By:Tom Werner

September 22, 2017

The International Trade Commission's decision on solar trade case could hurt the booming U.S. solar industry job market.

Let’s put it bluntly. The International Trade Commission (ITC) made the wrong decision today in its finding of injury in the Section 201 solar trade case.

Should the ITC move ahead with recommending import tariffs, quotas, or other global import restrictions, the result will be right out of an Economics 101 textbook. Prices for American-manufactured solar equipment will rise, and a global marketplace will adjust to source from competitively-priced foreign sources. That could undermine an American industry that has been experiencing exponential growth and creating jobs at an unprecedented rate. And the potential knock-on effect on other industries we partner with – including steel, glass and aluminum – is alarming.

If the intent of tariffs is to protect U.S. companies and employees, the practical effect would be just the opposite. We need the Trump Administration to secure America’s position as an energy innovation leader, or a global competitor will undoubtedly seize the moment.

Despite today’s news, I’m optimistic that the Administration recognizes that, as one of the fastest-growing sectors in the U.S. economy, solar presents a unique opportunity for our economy and nation’s competitiveness. To be clear, two very small companies are driving the case, both of which are controlled by companies outside the U.S. They represent less than one-half of one percent of the nation’s solar energy workforce. Quite simply – when the Administration reviews all the facts, I think they will see that following the lead of a China-owned company puts American energy leadership into the hands of foreign competitors.

The application of tariffs is not inevitable and is far from over. The ITC will now hold a “remedy hearing” during which alternative recommendations will be put forward, followed by a formal ITC recommendation to President Trump, who will make a final decision by early January.

It’s important that the ITC recognize that solar is a vibrant and diverse industry. Applying tariffs unilaterally does not take into account variations in the technological advances by some in our industry; the investment in sophisticated supply chains, built within existing trade networks many have made; or the different production methods many in our industry use. There’s a significant opportunity for the ITC to remain true to today’s decision, but also develop a recommendation that is nuanced enough to work for the solar industry. I’m hopeful this sentiment will prevail at the remedy hearing.

The harmful effects of the ITC decision, if it is implemented, are both clear and compelling.

  • Our ability to compete globally will be hindered. Solar energy use has grown significantly as technologies have improved and costs have decreased. The increased prices that result from tariffs will halt – and, in fact, reverse – this momentum, prompting the redirection of investment dollars to what will be more stable and rapidly growing markets in Europe, Asia, Africa, and Latin America.

  • Jobs will be permanently lost. There are now 260,000 jobs in the solar power industry, with annual employment growth running in double digits. If artificially-forced increased prices depress the market, many of those jobs will be at risk.

  • Other manufacturing sectors will take a big hit. There will be ripple effects, as well, for the steel, glass and aluminum sectors and other industries that are part of the solar industry’s supply chain.

  • America will cede leadership in energy innovation to China, India, and many other countries (for no good reason). Whomever wins the race to develop the next great innovative technologies in solar power will have an important advantage in the global energy marketplace. In the name of unnecessary protectionism, the United States would be ceding this leadership role to China, India, and Japan. It shouldn’t escape the Administration’s notice that one of the companies requesting the ITC action is majority Chinese-owned.

Tariffs aren’t an economic tool that should ever be used lightly. They are a retaliatory tactic to protect vulnerable domestic industries against unfair trade practices by foreign competitors. America’s solar power industry, however, is anything but failing. Last year alone, SunPower invested more than $120 million in research and development in the U.S. Our customers, such as Campbell Soup Company, Duke Energy, FedEx, Toyota, Macy's, Walmart and others will directly benefit from this innovation. The cause of energy diversity also benefits from new, more effective products, at lower prices.

Finally, history must be our guide. In 2002, the U.S. government placed stiff tariffs on imported steel in an effort to protect the American steel industry. Instead the action did major damage. It caused the loss of up to 200,000 domestic jobs and the loss of $4 billion in wages over a nine-month period. Adding insult to injury, the tariffs were ultimately withdrawn after a negative hearing at the World Trade Organization. The U.S. should not make the same terrible mistake in determining the near-term future of the solar industry.

Regardless of this decision, we are committed to working toward a constructive outcome and believe we must achieve one together. The ITC didn’t act in the best interests of an American success story, but now there is a real chance for both the Commission and the Administration to do so and maintain the nation’s leadership in solar energy technology development and solar energy deployment. We are ready to roll up our sleeves and will be engaged to help ensure this happens.