Obama's Solar Trade War

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Obama's Solar Trade War

The Obama administration decided last month to slap tariffs on Chinese-made solar panels because, they claim, Chinese subsidies undercut U.S. manufacturers. It's an odd industry for the administration to target - all those Chinese subsidies have made solar roughly price-competitive as an energy source for the first time, something the supposedly environmentally-minded administration would approve of. Now the administration wants to make it more expensive.

Yet as DigiTimes notes, Chinese suppliers may be able to skirt the costs:

China-based solar firms, however, have been finding ways to avoid paying the tariff such as transfering solar cell orders to Taiwan. Taiwan-based solar cell makers have been experiencing rising capacity utilization rates but indicated that orders from China-based firms often have unprofitably low quotes. China does not want to give up on the US market because it is one of the fastest growing solar markets in the world.

Beyond that, it's very odd that the Obama administration would go to such great lengths over Iran, including, potentially, using military force but won't countenance cheap solar panels from China. One policy potentially threatens the lives of American service personnel and runs the risk of a near-term recession if a brief war in the Gulf causes oil prices to soar (among a host of other potentially negative outcomes). Letting cheap Chinese solar panels into the U.S. market, however, hurts the employment prospects of a small industry (unless these panels are somehow dangerous - a case I've not yet heard).

Obviously these two events are not tightly correlated, but they are related. Solar power isn't going to ween the U.S. off of oil as a transport fuel in the short-term (as I understand it, the solar roof experiment on the Prius was a bit of a flop), but the more alternative energy sources go online, the more the overall energy mix will tilt away from oil and the greater the chance that Washington can finally stop obsessing about the Mideast.

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