Volts podcast: Abigail Hopper on the trade case that is crushing the US solar industry

In this episode, Abigail Hopper of the Solar Energy Industries Association discusses the trade complaint that has cast a pall over the US solar industry, why she believes it should be dismissed, and the complexities of tariff policy.

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Text transcript:

David Roberts

Back in 2012, the Obama administration levied tariffs on solar panels from China, to punish the country for unfairly subsidizing its panels in an attempt to corner the market. In the ensuing years, US imports from China fell off sharply and imports from Cambodia, Malaysia, Thailand, and Vietnam rose just as quickly.

Early this year, a tiny California-based solar manufacturer, Auxin, filed a trade complaint with the US Department of Commerce, alleging that China is effectively laundering its solar supply chain through third-party countries, thereby illegally circumventing tariffs. It asked Commerce to apply commensurate tariffs on imports from those countries. (Canary Media has extremely thorough coverage of the case, if you want to catch up.)

Commerce is investigating. Meanwhile, the industry has been thrown for a loop — imports have fallen off, projects are being cancelled, and projections of growth are being revised radically downward. The tariffs could be anywhere from 30 to 250 percent, which would radically change the economics of big solar projects, and if applied, will be retrospective over the past two years, which means even existing contracts are in jeopardy. The uncertainty has cast a pall over the entire sector.

The Solar Energy Industries Association (SEIA) has been advocating against tariffs from the beginning and is calling on Commerce to dismiss the complaint. I contacted Abigail Hopper, the head of SEIA, to talk about the merits of the case, whether building a domestic solar supply chain is a good goal, whether tariffs work, and what other policies might be preferable.

With no further ado, Abigail Hopper of SEIA. I'm not going to say the whole thing. Welcome to Volts. Thanks for coming.

Abigail Hopper

Thanks for having me. I'm glad to be here.

David Roberts

So this is a knotty and complicated issue we're going to get in here.

Abigail Hopper

Is that the K-N-O-T-T-Y naughty?

David Roberts

Yes, exactly.

Abigail Hopper

Okay, just checking.

David Roberts

Also, perhaps naughty, we'll see at the end. So I want to kind of go through it piece by piece, before we get to the tariff dispute, the tariff case that's at issue here, let's go back a little bit and just talk about the tariffs. These date back to Obama, the Obama era. So why don't maybe you just tell us sort of what tariffs are in place, and what is the rationale for tariffs, like when Obama put these in place in 2012? What is the sort of stated rationale? What are they meant to accomplish?

Abigail Hopper

Sure. And you already have displayed more knowledge than the average person around the multiple layers of tariffs that the solar industry is dealing with. So, yes, these go back to 2012. And at that time, there was an allegation and then a finding, that China was dumping its product into United States. That meant that the Chinese government was unfairly subsidizing production of solar cells and solar modules and then selling them into the United States below cost. So if it cost $10 to make it, they would sell it in for $5, and the Chinese government would suck up the other $5.

David Roberts

And presumably this is not just, like, unfair or unsporting. This violates some law or treaty.

Abigail Hopper

Yes, it violates the trade laws, and therefore the tariffs were put in place to address that unfair practice.

David Roberts

And then there were more under Trump. What did he add?

Abigail Hopper

So the ones we just talked about, people refer to usually as the ADCBD, Anti-Dumping Countervailing Duties cases, and those are from 2012, and those apply to products coming out of China. In 2017, a case was initiated, and then in 2018, President Trump imposed tariffs. And those are the Section 201. That's the section of the statute it applies to. And those were placed on cells and modules coming from any country in the world. There were a couple of specific exceptions, but generally, any country in the world, these tariffs applied and they started at 30% and stepped down.

There's a whole drama around the bifacial modules and that exclusion, I'm happy to talk about. But those were additive to whatever ADCBD tariffs that were already in place.

David Roberts

So specifically, then, imports from China would face both of these tariffs added together.

Abigail Hopper

Correct.

David Roberts

I mean, the rationale for the first set makes sense. If China is doing something illegal under trade law, that makes sense. But what is the rationale for just slapping tariffs on all imports? That can't be that all importers are breaking trade laws. What's the rationale there?

Abigail Hopper

Yeah, it's a totally different theory of the case. It is not a claim based on fault or anyone being nefarious or violating laws. Rather, the finding is, the allegation and the finding is that the US domestic market has been harmed by competition, and they basically need a pause. They need a pause. They need a break. "Give me a second. I got to get it together." And so the best way that one of my trade lawyers explained it to me, as I was not well versed in trade law when I started this gig.

David Roberts

Little did you know you were going to get a PhD.

Abigail Hopper

Little did I know, right. He explained it as basically putting an umbrella over the United States.

David Roberts

Right.

Abigail Hopper

So there's this protection, right. And the goal of those Section 201 tariffs is to provide an opportunity for the US solar domestic manufacturing base to recover and to build back.

David Roberts

Sure. But what I don't get is that seems like the mirror image of Chinese subsidies. In other words, that seems like giving the US domestic market an unfair advantage. It seems like that would also be illegal under trade law for the same reasons.

Abigail Hopper

So it's not illegal under US trade laws, right. It's certainly, I think a lot of people think smacks of protectionism of US industry. There were complaints taken to the World Trade Organization, right, to allege, that the imposition of the Section 201 tariffs violates World Trade Organization rules, or I don't know what they're called there, actually. Whatever,