China USA Trade War fails to Throttle the Growth of the Solar Industry

The USA China trade war has ratcheted up in the last 18 months with USA imposing more and more duties on Chinese imports which has itself been retaliating in a small measure with duties on imports of USA agricultural and energy products. The solar industry has been affected by the trade war much before it started with the USA imposing countervailing and anti-subsidy duties on imports of Chinese solar panels as far back as 2012. However, these duties have failed to stop the growth of either Chinese exports or the growth of the USA solar industry.

Also, read How Did Trump Tariffs Affect the US Solar Industry

The massive price declines being seen in solar products as well as the technological gains have meant that the duties have failed to overpower the gains being made due to the cut in solar prices. China has also adopted its supply chain to sidestep the USA duties by building factories in South East Asia with facilities in Vietnam, Thailand, and Malaysia. When the Trump administration had come to power, one of the first salvoes in its trade war against China was to put safeguard duties on imports of solar panels which not only affected China but other countries such as the SE Asian ones as well. Despite this, China exports have continued as solar LCOE is lower than that of coal and gas plants in the USA.

China recently won a WTO ruling against the ADD that was imposed in 2012 and is currently contesting the new safeguard duties that came into effect last year. There is every chance that WTO will also rule against the safeguard duties that were imposed, as the ruling does not seem to have a very good justification. But whether the USA will listen to WTO is another matter as Trump has been repeatedly blasting the WTO of being outdated and prejudiced against US interests.

Despite the trade war and the duties, the solar industry in the USA is going from strength to strength with a record 2.7 GW of solar energy installations in the first quarter of 2019. With the imminent end of the US Investment Tax Credits (ITC) policy coming in 2020, the current year is expected to see a surge of solar energy capacity. The duties have not been high enough to make solar prices go out of kilter.

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