US Safeguard Backfires
US President Donald Trump's protectionism has emerged as the most threatening risk in the global economy, in particular, because of massive tariffs on photovoltaic products.
President Trump has been justifying such massive tariffs on washing machines and photovoltaic products to protect the US industry and create jobs, but there are some arguments over them. There is a warning that only US consumers will suffer damage and rather, jobs may be cut.
First, this kind of phenomenon is taking place in the solar panel industry. After only one week from the decision to impose heavy tariffs, jobs are going down.
On January 22, the Trump Administration triggered a safeguard that makes solar energy products imported from China, Malaysia and South Korea subject to a 30% tariff in the first year, a 25% tariff in the second year, a 20% tariff in the third year, a 15% tariff in the fourth year. The administration did that because 95% of solar panels currently in use in the US are imported. This stemmed from the fact that US producers were kicked out of the market due to an intense price war won by Chinese companies. However, Suniva and SolarWorld Americas both of which are US solar panel manufacturers, demanded that the Trump administration impose tariffs on import solar panels, saying that the situation should be changed and carried through it.
As a result, jobs are disappearing rather than increasing. Most workers in the US solar power industry are working in the power generation sector by assembling components rather than manufacturing them. According to the US Solar Energy Industry Association (SEIA), the US photovoltaic industry is employing some 260,000 people. Among them, only 2,000 people are engaging in the manufacturing of batteries and modules.
Most of them are engaging in the construction and maintenance of photovoltaic power generation systems that build and install solar panels. Excessive taxation on import solar panels can ultimately benefit a small number of manufacturers, but will hurt system builders that are the majority.
The US solar power industry is concerned that such worsening profitability will turn power generation companies' eyes to other sources of energy other than solar power.
"Solar power cannot compete with cheap energy sources in Florida, Georgia, South Carolina, and Texas," said an analyst with GTM Research. "Solar power is expected to be replaced by natural gas, especially in the southeast of the US."
“It is expected that 23,000 jobs will vanish in the solar industry this year,” an SEIA official said. “Large-scale power plant complex projects will be postponed or called off, scrapping a total of billions of dollars worth of investment.
"More people are working in the renewable energy industry than in the coal industry. Building a high tariff wall against solar panels will make it difficult for the US to reach its goal of curbing climate change as well as cut jobs,” said Joseph Eugene Stiglitz, an American economist and a professor at Columbia University at the World Economic Forum (WEF) in Davos, Switzerland. Stiglitz is a recipient of the Nobel Memorial Prize in economic sciences.