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Tariff Update: The US ITC released their recommended remedies. Up next? Trump’s review

president trump on solar tariff

Nov. 22, 2017 | By Marya Friedman

Chairman Schmidtlein was right, it has been a wild ride so far in the solar industry.

Determining whether a tariff should be placed on imported panels, and if so how much – has been a long (still ongoing) process. But we’re approaching the end now that the U.S. International Trade Commission has made their recommendations for President Trump.

So what did the ITC decide and what happens next? Before we jump into what lies ahead, let’s recap what’s happened so far.

Brief timeline overview if you missed our last article:

  • May: Suniva & SolarWorld petitioned for damage reparations
  • May-September: The U.S. ITC investigated Suniva & SolarWorld’s damage claims
  • October: Those pro-tariff, and those against, had to make their case to the ITC. The ITC ultimately ruled in favor of damage reparations, through both quantitative restrictions and fees on imported solar cells & modules (panel components). A lot has happened since May, but the biggest takeaway from the investigation and hearings is that, based on the damage Suniva and SolarWorld claimed, the ITC unanimously recommends both a quota and some sort of fee on imports. . But should this fee be a tariff? And how high should it be? ?

Among the four commissioners, there are three distinct remedy proposals

Chairman Schmidtlein drafted a more aggressive recommendation – “an ad valorem tariff rate of 35 percent to be incrementally reduced during the 4-year remedy period.” 1 Meaning, the higher the value of the panels, the higher the tax, starting at 35%. Each year, during the 4-year remedy period, the tax rate would decrease by 1%. Below is a table outlining her proposal:

Chairman Schmidtlein’s Recommended Remedy1

Tariff-rate QuotaYear 1Year 2Year 3Year 4
In-Quota Tariff Rate10%9.5%9.0%8.5%
In-Quota Volume Level0.5 Gigawatts0.6 Gigawatts0.7 Gigawatts0.8 Gigawatts
Out-of-Quota Tariff Rate30%29%28%27%
Modules: Tariff (Ad Valorem) -->35%34%33%32%

 

Vice Chairman Johanson & Commissioner Williamson’s Recommended Remedy2

Vice Chairman David S. Johanson and Commissioner Irving A. Williamson, however, have a more lenient tariff plan in mind. They recommend a 30% tariff that decreases 5% every year during the 4-year term (detailed below)2:

Cells: Tariff-rate QuotaYear 1Year 2Year 3Year 4
In-Quota Tariff Rate10%9.5%9.0%8.5%
In-Quota Volume Level0.5 Gigawatts0.6 Gigawatts0.7 Gigawatts0.8 Gigawatts
Out-of-Quota Tariff Rate30%29%28%27%
Modules: Tariff (Ad Valorem)35%34%33%32%

 

Commissioner Broadbent’s Recommended Remedy

While Commissioner Meredith M. Broadbent recommends a quota as well, she is firmly against imposing a tariff. She believes that the resulting price increases would suppress the demand for panels in the United States, and “adversely affect the hundreds of thousands of U.S. workers employed” by the solar industry.4 Instead she recommends a licensing fee on imports that would directly fund developmental assistance to domestic panel manufacturers.

 Year 1Year 2Year 3Year 4
Quota: Cells & Panels8.9 Gigawatts10.3 Gigawatts11.7 Gigawatts13.1 Gigawatts
Import License Revenue (estimate)$89 Million$103 Million$117 Million$131 Million

Up next is the final leg of the process – getting Trump’s approval. The ITC will submit their proposed remedies to the United States Trade Representative (USTR). The USTR will then accept public comments until November 20th. After that, the Trump administration will announce its decision at a public hearing on December 6th.

We know Trump hasn’t exactly been pro-renewables (understatement), but will he be in favor of a high tariff, or in favor of a tariff at all? According to the New York Times, business lobbyists have argued “that tariffs benefit a narrow slice of industry at the expense of other companies and consumers of those products, who have to pay higher costs.”3 The Washington Post expressed doubt in a solar tariff as well, stating that it  would “harm far more Americans than it could possibly help.” 5 In line with these fears, Commissioner Broadbent noted that neither Suniva nor SolarWorld had submitted an adjustment plan to concretely explain how they would keep their businesses afloat once the 4-year tariff period had ended.

With conservative interest groups and the majority of U.S. solar developers, installers, and manufacturers down the supply chain aligned against the tariff, the December 6th public hearing is sure to be packed with people – including members of the Green Street team! So be sure to follow along on our twitter @greenstsolar for updates.

 

 

1.https://www.usitc.gov/press_room/documents/solar201_remedy_commissionerstatements.pdf

2.https://www.greentechmedia.com/articles/read/itc-solar-trade-case-recommendations#gs._jGuDAs

3.https://www.nytimes.com/2017/10/31/business/solar-industry-import-tariffs.html

4.https://www.usitc.gov/press_room/documents/solar201_remedy_commissionerstatements.pdf

5.https://www.washingtonpost.com/opinions/a-case-on-imported-solar-cells-will-put-trumps-promise-on-america-first-to-the-test/2017/11/05/b6ece33c-bb47-11e7-9e58-e6288544af98_story.html