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Commerce Department Hits Chinese Solar Panels With Token Tariff

If you ask people who actually know about Solyndra, they will tell you that the solar manufacturer went out of business due to cheap imports of the same technology from China. This drove down profit margins in the industry, and Solyndra couldn’t compete. Overall, the macro implication of this means cheaper solar panels for the world, translating into more solar deployment and a better mix of renewable energy. However, China was violating trade laws and treaties through subsidizing its solar panel industry, and for those laws to mean anything, they must be met with a response. Yesterday, the Commerce Department made that response, albeit in an exceedingly minor way:

After months of speculation and debate about unfair Chinese subsidies to domestic solar manufacturers, the U.S. solar industry finally has an answer to one piece of the ongoing trade case: Solar panels imported from China will be hit with a small tariff.

The Department of Commerce issued a preliminary decision today based upon the agency’s impartial review of Chinese subsidies to domestic solar companies.

The tariffs range from 2.9 percent to 4.73 percent — dramatically lower than the 20 percent expected by many industry analysts. It is important to note, however, that today’s decision from Commerce is the first of two key tariff rulings: subsidies and dumping. The second decision on whether Chinese companies are dumping panels into the U.S. market below cost is expected in May.

We’ll see if any duty gets assessed from dumping. Usually that duty trends higher than one from subsidies. But clearly the Commerce Department didn’t seek punitive damages in this case, which had the effect of limiting the total tariff. I cannot fully assess if the duty is meaningful or just a joke, but it does raise funds that will hopefully go back to supporting the economy stateside, to the benefit of American workers.

This would not have happened without the activism of a small coalition of domestic solar panel makers known as the Coalition of American Solar Manufacturers (CASM). Of course, there are countervailing forces in that industry. Solar panel installers benefit from cheaper products on the market, which increase demand for solar panels, and thus their services. You could get a net loss of jobs if you artificially set the price of Chinese solar panels too high.

Overall, you have to determine if your goal is for more renewable energy or more jobs in the US manufacturing sector. But the flagrant violation of trade laws is what tips this over the edge for me. Because that’s not limited to solar panel manufacturing. The Chinese government habitually subsidizes their native industries and undercuts foreign competition by dumping cheap inventory on the market. That’s not limited to areas where renewable energy benefits. If it goes unchecked because that’s the “good kind” of trade law violations, that’s just a recipe for further violations down the road. These trade laws have to mean something, in the end.

So more industries should follow the lead of the solar manufacturers and file claims against Chinese government practices. I know this will lead to cries of “trade war,” but that war has already been waged, by China. If we refuse to fight it in the name of neoliberalism, we will suffer the consequences.

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David Dayen

David Dayen

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