Domestic Solar Manufacturing and New U.S. Tariffs
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February 2, 2018
Domestic Solar Manufacturing and New U.S. Tariffs
On January 23, 2018, President Trump signed a presidential
U.S. Demand for Solar Equipment
proclamation imposing emergency tariff restrictions, known
Over 1.3 million PV systems (with 14.8 gigawatts of
as safeguards, over the next four years on U.S. imports of
capacity) were installed in the United States in 2016, more
crystalline silicon photovoltaic (PV) cells and modules. The
than four times the level of 2012. A number of factors
proclamation also included an annual 2.5 gigawatt tariff-
account for the growing domestic demand for PV products,
free quota for solar cells; however, imports of solar
including falling cell and module prices, the solar
modules are to face tariffs regardless of volume.
investment tax credit, state standards that require utilities to
On February 7, 2018, the initial solar equipment tariff is to
generate power from renewable sources, and higher
be 30%. Thereafter, the tariffs are to decline yearly,
efficiency.
bottoming out at 15%. The temporary solar tariffs are set to
Domestic Solar Manufacturing
expire on February 6, 2022, but the President may extend
Domestic PV manufacturing has expanded in recent years.
them for a maximum of another four years.
An August 2017 ITC report found that between 2012 and
The proclamation, one of the first trade actions by the
2016, production capacity of U.S. PV module
Trump Administration, stems from a petition filed by two
manufacturers rose 34%, and domestic production
U.S.-based but foreign-owned solar equipment
expanded by 24%. Nonetheless, falling prices have made it
manufacturers and a subsequent ruling by the U.S.
difficult for domestic PV manufacturers to operate
International Trade Commission (ITC) that imports have
profitably. From January 1, 2012, to July 2017, more than
caused injury to domestic producers.
two dozen domestic PV producers were in bankruptcy or
Solar Photovoltaic Manufacturing
shuttered their U.S. operations. Approximately 20 solar PV
The proclamation concerns PV cells and modules made
manufacturing facilities were in operation domestically as
with crystalline silicon, which is the main technology used
of July 2017, according to the ITC.
by solar manufacturers (accounting for more than 90% of
Cell and module production occurs mostly outside the
global PV production) and used to produce solar energy.
United States. In 2015, U.S. production accounted for 2%
Manufacturing such products does not require assembly of
of worldwide cell and module production, according to the
complex machinery and thousands of parts; most PV
International Energy Agency.
systems have no moving parts at all. Solar cells, the basic
Solar Manufacturing Employment
components of a PV system, are assembled into modules,
A relatively small share of the 260,000 solar jobs in the
also known as panels, and modules in turn are connected to
United States is in manufacturing; most jobs are in the
one another in arrays (see Figure 1) that feed energy into a
design, sales, and installation of solar systems. About
building’s electrical system or a utility’s power grid.
38,100 workers—roughly 15% of all jobs in the solar
Figure 1. Solar (PV) Cell, Module, and Array
industry—were employed in producing solar equipment in
November 2016, according to the Solar Energy Industries
Association (SEIA), an industry trade group (see Figure 2).
Of the manufacturing jobs, SEIA estimates 2,000 people are
employed in solar cell and module production. SEIA, which
opposes the safeguards, projects they will raise the cost of
cells and modules, leading to a lower number of
Source: Adapted by CRS from SamlexSolar.
installations and the loss of 23,000 jobs.
Figure 2. U.S. Solar Energy Industry Employment
Solar modules are often described as a commodity,
meaning they can be mass-manufactured and their quality is
similar among most manufacturers. Large producers have a
cost advantage because of economies of scale.
Major capital investments are needed to build or upgrade a
PV manufacturing facility. PV production is highly
automated. Domestic module manufacturers have told the
ITC that labor costs accounted for about 7% of production
costs in 2016. Domestic transportation costs for finished
Source: SEIA, National Solar Job Census, 2016.
modules produced in the United States are in the range of
Imports of Solar Cells and Modules
2%-3% of value. The costs of materials, capital equipment,
According to one estimate, imports of solar cells and
and research and development account for much of the rest.
modules supplied 88% (roughly 13 gigawatts) of U.S.
domestic demand in 2017. Because of the domestic solar
industry’s high dependence on imported cells and modules,
https://crsreports.congress.gov
Domestic Solar Manufacturing and New U.S. Tariffs
other solar energy users—from utilities to homeowners—
The new tariffs are to be applied to cells and modules from
could see costs increase as imported solar equipment
major solar-PV-producing countries. The restrictions do not
becomes more expensive.
exclude countries that have free trade agreements with the
The value of imported solar cells and modules rose 60%
United States, such as South Korea, Canada, and Mexico.
from 2012 to 2016, from roughly $5 billion to $8.3 billion
In the cases of China and Taiwan, the new safeguard tariffs
annually. Since 2012, imports of solar equipment have risen
are to be assessed on top of existing antidumping and
every year, except for a sharp decline in 2013, following the
countervailing duties. Other than Thailand and the
imposition in 2012 of stiff U.S. antidumping and
Philippines, developing countries individually accounting
countervailing duties on Chinese-manufactured solar cells.
for less than 3% of total imports are exempt from the solar
In 2015, the United States imposed additional duties on PV
safeguard import restrictions.
producers from China and Taiwan.
The U.S. Trade Representative is responsible for rules and
Because of these restrictive trade actions, solar PV imports
procedures for companies to request product exclusions.
from other countries have increased in recent years. As a
This could leave out certain niche or specialty products,
result, the vast majority of the products that face U.S. solar
which are either not produced by the domestic industry or
safeguard tariffs are produced in, and exported from,
are produced in insufficient quantities to satisfy U.S.
countries other than China and Taiwan. In particular, PV
demand, such as solar-powered backpacks and lanterns,
cell and module shipments from South Korea to the United
high-efficiency panels, or even imported 72-cell solar
States rose to a record high of $1.3 billion in 2016. PV
modules for utility-scale solar projects. In addition, the
imports from Mexico totaled about $822 million in 2016.
safeguard measure requires a review by the ITC roughly
Taken together, in 2016, South Korea and Mexico supplied
halfway through the four-year tariff period.
a quarter of total U.S. PV imports.
Such trade measures may invite retaliatory action by other
Safeguard Import Restrictions
countries. South Korea has said it would consider filing a
case against the United States at the World Trade
The Trump Administration imposed the new safeguard
Organization (WTO), Taiwan has requested WTO
tariffs under Section 201 of the U.S. Trade Act of 1974 (19
consultations, Mexico has said it will use all legal resources
U.S.C. §2251), which allows domestic industries that claim
in response to the U.S. trade action, and the European
to have been seriously injured or threatened with severe
Union is reportedly evaluating the impact and legality of
injury from rising imports to petition the ITC for temporary
the U.S. tariffs.
import relief. Such investigations are rare; the last one was
in 2002, when the George W. Bush Administration imposed
Effects on the U.S. Solar Energy Industry
steel safeguard duties to protect the domestic steel industry. Despite a growing market for solar energy equipment,
The proclamation supports the petition by two foreign-
domestic production capacity can meet only about 20% of
owned, U.S.-based companies: Suniva (a privately held PV
U.S. solar market demand, according to SEIA. Generation
producer currently in bankruptcy and now majority owned
of utility-scale solar from photovoltaic installations
by a Chinese firm) and SolarWorld Americas (until
quintupled between 2013 and 2017, according to the
recently, a subsidiary of a German-headquartered firm
Energy Information Administration, although PV solar still
which filed for insolvency in 2017).
accounts for only about 1% of all utility-scale generation.
SolarWorld Americas operates the largest solar cell and
Utility-scale projects accounted for more than 70% of all
module plant in the United States. The co-petitioners
PV capacity installed in 2016. This segment of the PV
claimed an effective import remedy would protect the
market may be most affected by the safeguards. On
remaining U.S. manufacturing capacity and lead to the
average, modules account for around 30% of the installed
creation of over 100,000 jobs across all segments of the
cost of a utility-scale solar system, according to the ITC.
industry. However, the 30% tariff remedy was less than the
Hence, if the safeguards raise the cost of cells and modules
50% rate the two co-petitioners had requested, in addition
by approximately one-third, for example, the cost of
to quotas. No estimates are available on the number of
building a large-scale solar generation project would be
factory jobs that might be supported by the actual tariff.
expected to rise roughly 10%. If higher costs for solar
According to the proclamation, the products covered by the
equipment lead project sponsors to favor other sources of
safeguard tariffs are broadly defined, and include solar
electric generation, such as wind and natural gas, total U.S.
cells, whether or not assembled into modules, as well as
demand for cells and modules may decrease.
parts of solar cells; direct-current generators with solar cells
However, foreign producers are believed to have shipped
attached; and inverters or batteries with crystalline silicon
large quantities of cells and modules to the United States in
PV cells attached. Excluded from the trade action are
late 2017 in anticipation of the safeguards, potentially
certain types of PV products, such as thin-film modules.
delaying the effects of the higher tariffs. Incentives
This exclusion can provide a limited source of tariff-free
designed to lower the cost of solar project development,
equipment for project developers and installers.
such as the Investment Tax Credit, remain in place through
The proclamation also includes an exemption from the
2022.
annual tariff for the first 2.5 gigawatts of imported solar
cells. The quota is to be allocated among all countries on a
Michaela D. Platzer, Specialist in Industrial Organization
first-come, first-served basis, according to U.S. Customs
and Business
and Border Protection. Importers are to be required to
IF10819
report the electricity power output attributable to such cells
and provide accompanying information.
https://crsreports.congress.gov
Domestic Solar Manufacturing and New U.S. Tariffs
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF10819 · VERSION 2 · NEW
February 2, 2018
Domestic Solar Manufacturing and New U.S. Tariffs
On January 23, 2018, President Trump signed a presidential
U.S. Demand for Solar Equipment
proclamation imposing emergency tariff restrictions, known
Over 1.3 million PV systems (with 14.8 gigawatts of
as safeguards, over the next four years on U.S. imports of
capacity) were installed in the United States in 2016, more
crystalline silicon photovoltaic (PV) cells and modules. The
than four times the level of 2012. A number of factors
proclamation also included an annual 2.5 gigawatt tariff-
account for the growing domestic demand for PV products,
free quota for solar cells; however, imports of solar
including falling cell and module prices, the solar
modules are to face tariffs regardless of volume.
investment tax credit, state standards that require utilities to
On February 7, 2018, the initial solar equipment tariff is to
generate power from renewable sources, and higher
be 30%. Thereafter, the tariffs are to decline yearly,
efficiency.
bottoming out at 15%. The temporary solar tariffs are set to
Domestic Solar Manufacturing
expire on February 6, 2022, but the President may extend
Domestic PV manufacturing has expanded in recent years.
them for a maximum of another four years.
An August 2017 ITC report found that between 2012 and
The proclamation, one of the first trade actions by the
2016, production capacity of U.S. PV module
Trump Administration, stems from a petition filed by two
manufacturers rose 34%, and domestic production
U.S.-based but foreign-owned solar equipment
expanded by 24%. Nonetheless, falling prices have made it
manufacturers and a subsequent ruling by the U.S.
difficult for domestic PV manufacturers to operate
International Trade Commission (ITC) that imports have
profitably. From January 1, 2012, to July 2017, more than
caused injury to domestic producers.
two dozen domestic PV producers were in bankruptcy or
Solar Photovoltaic Manufacturing
shuttered their U.S. operations. Approximately 20 solar PV
The proclamation concerns PV cells and modules made
manufacturing facilities were in operation domestically as
with crystalline silicon, which is the main technology used
of July 2017, according to the ITC.
by solar manufacturers (accounting for more than 90% of
Cell and module production occurs mostly outside the
global PV production) and used to produce solar energy.
United States. In 2015, U.S. production accounted for 2%
Manufacturing such products does not require assembly of
of worldwide cell and module production, according to the
complex machinery and thousands of parts; most PV
International Energy Agency.
systems have no moving parts at all. Solar cells, the basic
Solar Manufacturing Employment
components of a PV system, are assembled into modules,
A relatively small share of the 260,000 solar jobs in the
also known as panels, and modules in turn are connected to
United States is in manufacturing; most jobs are in the
one another in arrays (see Figure 1) that feed energy into a
design, sales, and installation of solar systems. About
building’s electrical system or a utility’s power grid.
38,100 workers—roughly 15% of all jobs in the solar
Figure 1. Solar (PV) Cell, Module, and Array
industry—were employed in producing solar equipment in
November 2016, according to the Solar Energy Industries
Association (SEIA), an industry trade group (see Figure 2).
Of the manufacturing jobs, SEIA estimates 2,000 people are
employed in solar cell and module production. SEIA, which
opposes the safeguards, projects they will raise the cost of
cells and modules, leading to a lower number of
Source: Adapted by CRS from SamlexSolar.
installations and the loss of 23,000 jobs.
Figure 2. U.S. Solar Energy Industry Employment
Solar modules are often described as a commodity,
meaning they can be mass-manufactured and their quality is
similar among most manufacturers. Large producers have a
cost advantage because of economies of scale.
Major capital investments are needed to build or upgrade a
PV manufacturing facility. PV production is highly
automated. Domestic module manufacturers have told the
ITC that labor costs accounted for about 7% of production
costs in 2016. Domestic transportation costs for finished
Source: SEIA, National Solar Job Census, 2016.
modules produced in the United States are in the range of
Imports of Solar Cells and Modules
2%-3% of value. The costs of materials, capital equipment,
According to one estimate, imports of solar cells and
and research and development account for much of the rest.
modules supplied 88% (roughly 13 gigawatts) of U.S.
domestic demand in 2017. Because of the domestic solar
industry’s high dependence on imported cells and modules,
https://crsreports.congress.gov
Domestic Solar Manufacturing and New U.S. Tariffs
other solar energy users—from utilities to homeowners—
The new tariffs are to be applied to cells and modules from
could see costs increase as imported solar equipment
major solar-PV-producing countries. The restrictions do not
becomes more expensive.
exclude countries that have free trade agreements with the
The value of imported solar cells and modules rose 60%
United States, such as South Korea, Canada, and Mexico.
from 2012 to 2016, from roughly $5 billion to $8.3 billion
In the cases of China and Taiwan, the new safeguard tariffs
annually. Since 2012, imports of solar equipment have risen
are to be assessed on top of existing antidumping and
every year, except for a sharp decline in 2013, following the
countervailing duties. Other than Thailand and the
imposition in 2012 of stiff U.S. antidumping and
Philippines, developing countries individually accounting
countervailing duties on Chinese-manufactured solar cells.
for less than 3% of total imports are exempt from the solar
In 2015, the United States imposed additional duties on PV
safeguard import restrictions.
producers from China and Taiwan.
The U.S. Trade Representative is responsible for rules and
Because of these restrictive trade actions, solar PV imports
procedures for companies to request product exclusions.
from other countries have increased in recent years. As a
This could leave out certain niche or specialty products,
result, the vast majority of the products that face U.S. solar
which are either not produced by the domestic industry or
safeguard tariffs are produced in, and exported from,
are produced in insufficient quantities to satisfy U.S.
countries other than China and Taiwan. In particular, PV
demand, such as solar-powered backpacks and lanterns,
cell and module shipments from South Korea to the United
high-efficiency panels, or even imported 72-cell solar
States rose to a record high of $1.3 billion in 2016. PV
modules for utility-scale solar projects. In addition, the
imports from Mexico totaled about $822 million in 2016.
safeguard measure requires a review by the ITC roughly
Taken together, in 2016, South Korea and Mexico supplied
halfway through the four-year tariff period.
a quarter of total U.S. PV imports.
Such trade measures may invite retaliatory action by other
Safeguard Import Restrictions
countries. South Korea has said it would consider filing a
case against the United States at the World Trade
The Trump Administration imposed the new safeguard
Organization (WTO), Taiwan has requested WTO
tariffs under Section 201 of the U.S. Trade Act of 1974 (19
consultations, Mexico has said it will use all legal resources
U.S.C. §2251), which allows domestic industries that claim
in response to the U.S. trade action, and the European
to have been seriously injured or threatened with severe
Union is reportedly evaluating the impact and legality of
injury from rising imports to petition the ITC for temporary
the U.S. tariffs.
import relief. Such investigations are rare; the last one was
in 2002, when the George W. Bush Administration imposed
Effects on the U.S. Solar Energy Industry
steel safeguard duties to protect the domestic steel industry. Despite a growing market for solar energy equipment,
The proclamation supports the petition by two foreign-
domestic production capacity can meet only about 20% of
owned, U.S.-based companies: Suniva (a privately held PV
U.S. solar market demand, according to SEIA. Generation
producer currently in bankruptcy and now majority owned
of utility-scale solar from photovoltaic installations
by a Chinese firm) and SolarWorld Americas (until
quintupled between 2013 and 2017, according to the
recently, a subsidiary of a German-headquartered firm
Energy Information Administration, although PV solar still
which filed for insolvency in 2017).
accounts for only about 1% of all utility-scale generation.
SolarWorld Americas operates the largest solar cell and
Utility-scale projects accounted for more than 70% of all
module plant in the United States. The co-petitioners
PV capacity installed in 2016. This segment of the PV
claimed an effective import remedy would protect the
market may be most affected by the safeguards. On
remaining U.S. manufacturing capacity and lead to the
average, modules account for around 30% of the installed
creation of over 100,000 jobs across all segments of the
cost of a utility-scale solar system, according to the ITC.
industry. However, the 30% tariff remedy was less than the
Hence, if the safeguards raise the cost of cells and modules
50% rate the two co-petitioners had requested, in addition
by approximately one-third, for example, the cost of
to quotas. No estimates are available on the number of
building a large-scale solar generation project would be
factory jobs that might be supported by the actual tariff.
expected to rise roughly 10%. If higher costs for solar
According to the proclamation, the products covered by the
equipment lead project sponsors to favor other sources of
safeguard tariffs are broadly defined, and include solar
electric generation, such as wind and natural gas, total U.S.
cells, whether or not assembled into modules, as well as
demand for cells and modules may decrease.
parts of solar cells; direct-current generators with solar cells
However, foreign producers are believed to have shipped
attached; and inverters or batteries with crystalline silicon
large quantities of cells and modules to the United States in
PV cells attached. Excluded from the trade action are
late 2017 in anticipation of the safeguards, potentially
certain types of PV products, such as thin-film modules.
delaying the effects of the higher tariffs. Incentives
This exclusion can provide a limited source of tariff-free
designed to lower the cost of solar project development,
equipment for project developers and installers.
such as the Investment Tax Credit, remain in place through
The proclamation also includes an exemption from the
2022.
annual tariff for the first 2.5 gigawatts of imported solar
cells. The quota is to be allocated among all countries on a
Michaela D. Platzer, Specialist in Industrial Organization
first-come, first-served basis, according to U.S. Customs
and Business
and Border Protection. Importers are to be required to
IF10819
report the electricity power output attributable to such cells
and provide accompanying information.
https://crsreports.congress.gov
Domestic Solar Manufacturing and New U.S. Tariffs
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.
https://crsreports.congress.gov | IF10819 · VERSION 2 · NEW