An upcoming decision by the Trump administration on whether to impose tariffs on solar energy imports is shaping up to be a major test of the president's "America First" trade agenda and how it fits with his pledge to support U.S. "energy dominance."
The International Trade Commission will decide by Friday if the U.S. solar industry is being hurt by cheap solar imports, mostly from Asian countries, setting up the opportunity for President Trump to impose tariffs.
As decision day nears, companies across the solar energy industry, one of the rising sectors in the U.S. economy, warn that a ruling in support of tariffs would harm the industry's progress by increasing their costs and would force them to raise prices for consumers.
"It's the 88,000 job question," said Abigail Ross Hopper, president of the Solar Energy Industries Association, the main trade group for the U.S. solar industry, which estimates 88,000 U.S, jobs could be lost from a tariff.
"The solar industry is booming, creating one out of 50 new jobs in the entire U.S. economy," Ross Hopper told the Washington Examiner in an interview. "Tariffs would put all of that at risk in a really fundamental way. This would be exceedingly harmful to our industry."
While the wider U.S. solar energy opposes tariffs, two U.S. companies are asking the Trump administration to act.
In April, solar panel manufacturer Suniva, later joined by SolarWorld, petitioned the International Trade Commission for tariffs on solar cells and a price floor on modules for imports coming from anywhere in the world, arguing that cheap foreign products are harming the domestic panel industry.
Both companies are bankrupt and foreign-owned (Suniva is based in Georgia but is majority owned by a Chinese company), though they primarily manufacture in the U.S.
If the trade commission agrees to grant the petition, it will have until November to recommend specific actions to the Trump administration, which would then have two months to issue a potential remedy.
The impending decision comes as U.S. homeowners and businesses have been increasingly embracing solar energy, a renewable power source with zero emissions that has become more affordable in recent years.
Indeed, the Trump administration announced earlier this month that it fulfilled three years ahead of schedule a goal set by former President Barack Obama to reduce the cost of solar energy generated by utilities to 6 cents per kilowatt hour by 2020.
Solar power still makes up a tiny portion— about 1 percent — of electricity generation in the U.S. But solar costs have fallen by about 70 percent since 2010, and the domestic industry now employs more than 260,000 people, according to the Solar Foundation.
Tim Brightbill, a lawyer representing SolarWorld, which is German-owned, says although lower prices have allowed more Americans to go solar, U.S. producers are struggling to compete as foreign companies make solar panels at less cost.
About 95 percent of cells and panels sold in the U.S. last year were made abroad, with most coming from China, Malaysia, and the Philippines, according to SPV Market Research.
"The demand for solar is strong and growing," Brightbill said in an interview with the Washington Examiner. "Unfortunately, imports have taken away almost all of that growth. There's been a global import surge, and that has caused a price collapse and great harm to dozens of strong U.S. companies. We are saying, this is a strong market, we should be manufacturing these products here."
Others in the solar industry say Suniva and SolarWorld's struggles have more to do with their own poor business practices than pressure from overseas.
"Here is the real story of this case: We have two foreign-owned, poorly managed companies using U.S. trade laws to put U.S. manufacturers out of business and causing U.S. employees to lose their jobs," Ross Harper said.
Ross Harper notes the U.S. has already imposed tariffs on China, perhaps the biggest target of the petitioners, slapping duties averaging about 40 percent in 2012.
In 2014, the U.S. put duties of 20 percent on producers from Taiwan. Those penalties are still in place, but Suniva and SolarWorld contend in their petition that China and Taiwan are moving production to other low-wage countries to avoid the tariffs.
U.S. solar company executives say the industry has evolved to keep pace with foreign producers of solar panels, becoming experts on other parts of the supply chain.
For example, the U.S. is a robust producer of tracking systems that follow the movement of the sun.
"I used to think we have to punish the Chinese and other countries for selling their products at low cost because they were trying to unethically capture the global market, but now, with how that would affect the rest of the industry, it's not worth it," said Yogi Goswami, the director of the University of South Florida's Clean Energy Research Center.
"We should focus on components of producing that give us an advantage here," he told the Washington Examiner.
Ed Fenster, chairman of San Francisco-based Sunrun, says tariffs would hurt blue-collar workers.
Sunrun is not a solar panel manufacturer. The company buys solar panels from overseas, mostly from Singapore, South Korea and Canada, and installs them on homeowners' roofs, selling customers the power the system generates.
Tariffs on imported solar panels would force Sunrun to raise prices and likely push consumers out of the market, Fenster says.
"This trade case makes no economic sense and no political sense for anyone," Fenster told the Washington Examiner in an interview. "If it moves forward, all Americans will be hit by higher electric bills because utility solar energy reduces the cost of grid power. Solar is an amazing job creator across the economy, supporting jobs accessible to all Americans, like installation, and sales. It's unclear who you make happy besides two private equity investors of two companies with a tariff like this."
Dan Shugar, the CEO of NEXTracker, a solar power tracking company, says he has experienced many sides of the industry in his 29-year-old career, including manufacturing solar panels.
"There's no problem making solar in the U.S.," Shugar said in an interview with the Washington Examiner. "It's doable if you are a well-capitalized company that has a product that's differentiated. You can totally do it."
Yet he says the uncertainty surrounding the solar trade case has forced him to relocate employees overseas because he's losing U.S. orders.
"Developers have pulled back; it's massively disrupted the market," Shugar said.
Brightbill, the SolarWorld attorney, says he regrets the trade case has split apart the solar industry as it braces for the International Trade Commission's ruling — and how the Trump administration responds to it. But he insists his client's case is well-meaning.
"This is not about two companies and their bad business practices," Brightbill said. "Sure, we are not happy this has turned out to be such a divisive issue. But we strongly think the best thing for this industry in the long term is to ensure some of this huge growth in U.S. demand is supplied by American-made products."