By: Ayesha Lomonaco
Section 201 of the Trade Act of 1974 functions as a strong trade remedy and authorizes the President to implement trade barriers to protect domestic industries that have been injured or threatened by an import.[i] The purpose of section 201 is to create a safeguard, and it requires the U.S. International Trade Commission (ITC) to determine if an article being imported into the United States causes or threatens to cause substantial injury to a domestic industry.[ii]
Earlier this Spring, solar cell manufacturer Suniva, filed for Chapter 11 bankruptcy, attributing its financial struggles to increased imports. [iii] Suniva’s bankruptcy filing alleged that the domestic photovoltaic (PV) cell industry has suffered due to increased imports that have greatly decreased domestic prices.[iv] Suniva subsequently petitioned the ITC, requesting a Section 201 action to implement a tariff of 40 cents per watt on imported solar cells and a floor price of 78 cents per watt for solar panels, including those manufactured with foreign cells.[v] The ITC reviewed Suniva’s petition and on September 22, 2017, ruled that solar imports negatively impacted the sale of solar panels manufactured in the United States.[vi] Conventionally, the next step in the process of a Section 201 action is to hold a hearing, and on October 3, the ITC held a hearing to recommend possible trade remedies.[vii] The recommendations then go before the President who will decide on a corrective action.[viii] For now it is a waiting game for the domestic industry.
Many within the solar industry have pointed out the dangers and the positive effects this mandated tariff presents to the viability of the U.S. solar industry. According to a recent study from Greentech Media, President Trump’s potential policy change could slash U.S. solar installations by two-thirds through 2022.[ix] The solar industry has argued that the tariff, if implemented, would increase prices and result in a loss of roughly 88,000 jobs.[x] For Sunrun, Inc. and Vivint Solar, Inc., both rooftop developers, the Section 201 tariff could double the cost of panels, effectively decreasing demand.[xi] According to Joseph Osha, an analyst at Jmp Securities, LLC., “a small tariff may not be as bad as the developers are making it out to be . . . the market will adjust.”[xii]
Although it is difficult to see clearly into the future, President Trump’s 2017 trade policy agenda, along with his support for American manufacturing and his want for tariffs, make it likely some remedy will be imposed on foreign made solar cells and panels. However, considering the various transitions within the current Administration, one would be hard pressed to make any definite conclusions. Only time will tell.
[i] 19 U.S.C.S § 2251(a) (2017).
[ii] 19 U.S.C.S. § 2252(b)(1)(A) (2017).
[iii] Keith Goldberg, 4 Things to Know About Suniva’s Solar Cell Tariff Bid, Law 360 (May 17, 2017, 8:29 PM), https://www.law360.com/articles/925034/4-things-to-know-about-suniva-s-solar-cell-tariff-bid.
[v] Solar Energy Industries Association, Suniva Trade Case: The Solar Industry’s View (June 2017), https://www.seia.org/sites/default/files/Suniva-Trade-Case-Membership-Factsheet_SEIA_6-15-2017-final.pdf.
[vi] Lacey Johnson, Julia Pyper, Solar Tariff Case Advances as ITC Finds ‘Injury,’ Greentech Media (Sept. 22, 2017), https://www.greentechmedia.com/articles/read/solar-trade-case-advances-as-itc-finds-injury#gs.nLnN8n0.
[ix] Cory Honeyman, Suniva and SolarWorld Trade Dispute Could Halt Two-Thirds of US Solar Installations Through 2022, Greentech Media (June 26, 2017), https://www.greentechmedia.com/articles/read/suniva-dispute-could-halt-two-thirds-of-us-solar-installations#gs.aozLA74.
[x] Chris Martin, First Solar to Profit if Trump Slaps Tariffs on Panel Imports, Bloomberg (Aug. 14, 2017, 1:12 PM), https://www.bloomberg.com/news/articles/2017-08-14/first-solar-to-profit-if-trump-slaps-tariffs-on-panel-imports.