Trump solar panel tax likely won’t matter due to falling costs

Trump solar panel tax likely won’t matter due to falling costs

Noah Smith on the Trump solar panel tax:

Because the U.S. now imports most of its panels, the import tax will probably hurt more American companies than it will help. But the overall impact is unlikely to be large because solar panel manufacturing costs have been dropping so fast that more expensive foreign imports will be merely a bump on the road. In 2017, a solar module producing one watt of power cost only around one-fifth of what it did in 2010:

There’s an interesting analysis of what lower manufacturing costs do to energy prices as a whole as well.

The tariff will create a number of less-obvious losers as well. Falling solar costs will eventually lower the price of electricity for U.S. companies — even when electricity users don’t switch to solar, lower costs can force natural gas, coal and nuclear plants to cut prices to remain competitive.

Cheaper electricity, in turn, gives American industry a boost. U.S. workers earn much higher salaries than workers in China and other developing countries, meaning that U.S. manufacturers can’t rely on cheap labor costs for their competitive advantage. Instead, they have to compete by having better technology and more capital equipment. This is why the shale-gas revolution was such a boon for U.S. manufacturers. Solar power promises to be even cheaper. Yet by slowing this process, solar tariffs could postpone the day when U.S. manufacturing comes back into its own.

via Trump’s Solar Tariff Is Bad, But Not a Huge Deal at Bloomberg.com

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