New tariffs on solar cells could make household modules more expensive

Much of the recent news about tariffs revolves around President-elect Donald Trump’s plans to raise tariffs across the board on products imported from China, Canada, Mexico and other countries.

But Joe Biden is still president, and his administration is imposing its own tariffs to boost solar production in the United States.

On Friday, the Biden administration announced new tariffs on solar cell manufacturers in four Southeast Asian countries – Malaysia, Cambodia, Vietnam and Thailand. Many Chinese solar manufacturers relocated their operations there after being hit by previous US tariffs.

The move impacts both solar manufacturers and solar installers in the United States

There is a tension at the heart of the federal government’s solar energy policy today.

Noah Kaufman of the Center on Global Energy Policy at Columbia University, on the one hand, said: “We want cheap solar energy because it leads to faster deployment of solar energy, so we can deploy clean energy more quickly.”

On the other hand, US politicians want these solar modules and cells to be made in America.

But for years it has been cheaper to import it, which is why the U.S. has repeatedly tried to raise the cost of importing Chinese solar power, only to see production move elsewhere in Southeast Asia.

“Trade is typically a slugfest,” said Mike Carr, head of the Solar Energy Manufacturers for America Coalition. He said these latest tariffs could cause foreign solar companies to relocate again.

But thanks to tax credits and other financial incentives from the Inflation Reduction Act, the domestic solar industry is starting to take off, he said.

“We’re talking about global-scale factories being built here in the United States for the first time in the history of solar energy,” Carr said.

But many of these factories build solar panels made from cells that are largely imported, said Elissa Pierce, solar supply chain analyst at Wood Mackenzie.

“Because the tariffs apply to solar cells, U.S. module manufacturers that import cells from these four countries will also face higher costs,” Pierce said.

Those costs are likely to be passed on, making solar installation more expensive, said Steve Cicala, an associate professor at Tufts University.

“And the more expensive it is, the fewer people will do it,” Cicala said.

And if we really want to combat climate change, he argued, we should use the most cost-effective solar energy, even if it is imported.