Trump tariffs will save some solar jobs and destroy others – the washington post grade 9 electricity formulas


Chinese solar panel makers evaded U.S. tariffs by relocating to Taiwan, and the Chinese government retaliated with its own duties on U.S. exports of the raw material used in making the panels — leading U.S. manufacturers to lay off more than 1,000 workers and scrap a new $1.2 billion factory.

Now, six years later, the United States is trying again. President Trump on Monday imposed a new round of tariffs on imported solar panels in response to fresh pleas from two financially troubled manufacturers, Suniva and SolarWorld. The companies — U.S.-based but foreign-owned — complain that Chinese rivals, backed by generous state subsidies, have flooded the U.S. market with solar panels at prices they can’t match.

For the president, the solar decision and a similar move against imported washing machines represent a big step toward fulfilling his campaign promises to get tough on trading partners such as China. Additional decisions loom on trade secrets, steel and aluminum, raising the prospect of a more confrontational trade stance that might cheer Trump’s supporters in the industrial heartland while unnerving investors and multinational corporations.

Three global firms — Wacker, REC Silicon and Hemlock Semiconductor — account for the vast majority of U.S. polysilicon production. The material is used to produce semiconductors for computers as well as the solar components that turn sunlight into electricity.

The Tennessee factory that Hemlock leveled in 2015 before it had produced anything was not the only collateral damage from the initial U.S. trade action. REC Silicon took refuge in a joint venture with a state-owned Chinese company, gaining a foothold in China but surrendering access to its proprietary technology in the bargain.

Industry representatives in recent weeks met with officials such as Robert E. Lighthizer, the president’s chief trade negotiator, and Commerce Secretary Wilbur Ross to plead for an alternative that would resolve all solar-related disputes between the United States and China.

Polysilicon producers say the United States should negotiate a comprehensive settlement with China to resolve both the old and new solar issues. Such a deal could divide the estimated $1.5 billion in customs duties that importers paid in the original trade case among the panel makers, polysilicon producers and rebates importers.

"Politicians like to say they’re going to bat for a particular group of people and like to look tough," said Daniel Ikenson, trade policy analyst at the nonpartisan Cato Institute. "What’s harder to see is there are costs . . . and they are real."

It may be too late to prevent further erosion in the U.S. polysilicon industry, given the dramatic expansion in Chinese production since the tariff war erupted. In 2010, the United States topped China 62,000 tons to 55,000 tons, according to Ethan Zindler, head of Americas for Bloomberg New Energy Finance. But by 2016, after a flurry of new plant construction, China produced 208,250 tons, nearly triple the total U.S. production.

The Chinese tariffs effectively barred U.S. suppliers from a market that accounts for 80 percent of global sales. U.S. exports of polysilicon to China plunged to less than $200 million in 2016, the most recent year available, from more than $1 billion before the tariffs were imposed, even as overall Chinese demand more than doubled.

Hemlock laid off roughly 500 workers in Michigan and Tennessee, including 100 who will leave the payroll this quarter. REC Silicon dropped 450 workers in Washington state, cut production capacity in half and mothballed a new $150 million facility.

Wacker Polysilicon North America produces polysilicon at a $2.5 billion plant in Charleston, Tenn., that was designed as an answer to China’s surging needs, a company executive told a U.S. Trade Representative Office hearing last month. The "health" of the facility and prospects for future expansion depend upon lifting the Chinese tariffs, said Mary Beth Hudson, the Charleston site manager.

Polysilicon factories are mammoth, multibillion-dollar facilities that in scale and appearance resemble oil refineries. Inside, workers use a chemical process to convert silane gas or quartz into polysilicon. Industry jobs pay well, with total compensation often exceeding $100,000, executives say.

The dispute that reached Trump’s desk saw Suniva and SolarWorld face off against a growing U.S. workforce of solar installers, engineers, project managers and sales executives. (Suniva filed for bankruptcy in the U.S. last year. SolarWorld AG, the German company that owns SolarWorld Americas, also filed for the German equivalent, insolvency, and is trying to sell its U.S. unit.)

The International Trade Commission concluded that rising imports are hurting the domestic industry and recommended to the president potential remedies including quotas and tariffs of up to 35 percent. Tariff opponents say that more than one-third of the industry’s 260,000 jobs are at risk of disappearing following the president’s action to discourage imports.

Suniva petitioned the government for protection in April, taking advantage of a clause in U.S. trade law that allows the president to impose sweeping global tariffs without any evidence that foreign trading partners acted unfairly. SolarWorld joined the fight for such "safeguard" measures one month later.

When the United States has imposed such safeguard measures in the past, its trading partners have inevitably complained to the World Trade Organization. And the multilateral trading body’s dispute settlement board has repeatedly found the specific U.S. actions in violation of Washington’s international commitments.

No U.S. industry has sought safeguard protection since 2001, when the steel industry appealed for help to the Bush White House. President George W. Bush imposed tariffs of up to 30 percent, drawing applause from domestic manufacturers but leading to steep job losses at companies that used steel.

Estimates of the jobs lost ranged from 26,000 to 200,000, dwarfing the steel jobs temporarily saved. Bush lifted the tariffs in 2003 after the WTO authorized the European Union to retaliate for the improper duties with more than $2 billion in levies on U.S. imports.