Are There New Tariff Shocks Coming Soon for Solar?

As the solar industry works to adjust to solar tariffs set by the Trump Administration in January on imports of crystalline silicon PV cells, the industry must now consider other possible new tariffs that could affect solar’s supply side.

U.S. Department of Commerce Secretary Wilbur Ross last week released reports on the department’s investigations into the impact on U.S. national security from imports of steel mill products and from imports of wrought and unwrought aluminum. 

DOC found that the quantities and circumstances of steel and aluminum imports “threaten to impair the national security.”

President Donald Trump is required to make a decision on the steel recommendations by April 11, and on the aluminum recommendations by April 19.

A tariff on aluminum would have enough of an effect on the solar supply chain that Soligent CEO Jonathan Doochin recently said that businesses should be considering the possible cost increases today as they make projections for the market.

While steel is used only nominally in the solar supply chain, aluminum is used in solar racking products, making a tariff on aluminum more significant for the industry than a steel tariff.

Doochin said in a Feb. 2 solar economic outlook webcast hosted by Soligent that, although racking is a small part of the overall installation costs, the tariff still would have a notable effect.

For steel, DOC recommended:

  • A global tariff of at least 24 percent on all steel imports from all countries; or
  • A tariff of at least 53 percent on all steel imports from 12 countries — Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam — with a quota by product on steel imports from all other countries equal to 100 percent of their 2017 exports to the U.S.; or
  • A quota on all steel products from all countries equal to 63 percent of each country’s 2017 exports to the U.S.

For aluminum, DOC recommended:

  • A tariff of at least 7.7 percent on all aluminum exports to the U.S. from all countries; or
  • A tariff of 23.6 percent on all products from China, Hong Kong, Russia, Venezuela and Vietnam, with quotas for all other countries equal to 100 percent of their 2017 exports to the U.S.; or
  • A quota on all imports from all countries equal to a maximum of 86.7 percent of their 2017 exports to the U.S.

Doochin estimated that a 20 percent tariff on aluminum would translate to an increase of $0.01 to $0.025 per watt under balance of systems costs.

“I think a lot of the supply chain will try to absorb that cost but it is worth noting because it’s another additional shock, which is not as public or as big [as the module tariffs], but it’s worth documenting,” Doochin said.

Lead image credit: CC0 Creative Commons | Pixabay

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Jennifer Delony, analyst for TransmissionHub, started her career as a B2B news editor in the local and long-distance telecommunications industries in the '90s. Jennifer began covering renewable energy issues at the local level in 2005 and covered U.S. and Canadian utility-scale wind energy as editor of North American Windpower magazine from 2006-2009. She also provides analysis for the oil and natural gas sectors as editor of Oilman Magazine.

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