Viewpoints on the Tariff “Truce” and Their Effects on the Solar Industry
/In a member update for SEIA, Abigail Hopper writes:
“
On Saturday evening over dinner in Buenos Aires, President Trump and Chinese President Xi Jinping agreed that they would suspend any further trade action for 90 days to allow for continued negotiations. In a follow-up statement, the White House indicated that the recently imposed Section 301 tariffs would remain at 10% for the next 90 days. The tariffs were originally scheduled to increase to 25% on January 1, 2019. For the solar industry, this means that the Section 301 tariff on Chinese inverters will remain at 10% for at least the next 90 days. U.S. module manufacturers who rely on Chinese inputs will also avoid higher tariffs. If at the end of 90 days the parties are unable to reach an agreement, the 10% tariffs will increase to 25%.
The White House further indicated that China agreed to purchase a “not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance” between the two countries. President Trump and President Xi also “agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture.”
While this temporary truce is good news, the structural issues at the heart of the dispute will be difficult to resolve in 90 days. Indeed, to date, China has made no indication that it is prepared to adopt any of the structural changes sought by the Trump Administration. The solar industry should also recognize that any U.S.-China agreement would likely only cover the Section 301 tariffs, and not the Section 201 tariffs (cells and modules), Section 232 tariffs (steel and aluminum), or antidumping and countervailing duties.
Sincerely,
Abigail Ross Hopper
President & CEO
“
Some additional industry and outside perspective on the temporary truce can be found in the links below:
Utility dive: Solar industry sees short-term pluses from U.S.-China trade truce
“Trade experts on a panel at the Solar Energy Industries Association (SEIA) Policy Summit on Wednesday viewed the 90-day delay on tariff escalation favorably, while hinting that the negotiation period may be too brief. Putting off the tariff increase "actually helps" companies making new manufacturing investments "in the short term," SEIA's vice president of market strategy, John Smirnow, told Utility Dive.”
solar power world: Chinese inverter tariffs won’t jump to 25% yet on January 1
https://www.solarpowerworldonline.com/2018/12/chinese-inverter-tariffs-wont-jump-to-25-percent-yet/
“According to a White House statement, President Trump and Chinese President Xi Jinping agreed to suspend further trade action for 90 days to continue negotiations.”
bbc: US-China trade war: Deal agreed to suspend new trade tariffs
https://www.bbc.com/news/world-latin-america-46413196
“China has pretty much given up nothing in this deal because the future tariffs threatened from the Beijing side were retaliatory in nature and only to be applied if the United State escalated.”
Generally, the consensus is that this is a short-term boon for those who have budgeted for the tariffs to escalate as previously scheduled. At this point, there is little likelihood that there will be any long-term reprieve from the tariffs for solar power, and the effects will be most substantially felt on projects with the lowest margins, i.e. utility and large commercial installations. With Trump’s twitter account stating he is a “Tariff Man” days after the supposed truce, there seems to be no end to the trade war, and the proposed “truce” seems more like a temporary cease-fire.