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A good article to read as we transition to our study of economics next week...President Trump's decision to place a 30% tariff is being done with the intention of protecting domestic solar companies, but it also has the potential to harm the fastest growing industry in terms of jobs. President Obama also placed tariffs on Chinese solar panels as a response to government subsidies which led to cheap foreign panels flooding the U.S. market. The author of the story's analogy is that "if the old tariffs represented closing the barn door after the horse has bolted, the new measures amount to putting a lock on the door."
Discussion Questions
1. Do you believe Trump's tariff on solar panels will help or hurt the U.S. solar industry economically?
2. The author suggests focusing on research and development--can U.S. companies design next generation solar panels to get market share back from China?
3. Is there still a bright future for the U.S. solar industry despite extensive international competition?
5 comments:
The fact that Trump was in support of a solar tariff, as opposed to tariffing any other of the millions of things that could be tariffed is suspicious. I imagine this decision was influenced to some degree by Trump's fossil fuel friends. While tariffing in general harms American consumers by raising the price and help American producers by letting them gain an edge, this is even worse. This tariff has the added cost of damaging the environment. Raising the price of something like a toy would actually help the environment. This does the opposite by making an alternative energy source more restrictive to access. It is already costly to get solar panels, and this will only make it worse.
At first this seems like an Trump the oil magnate trying to shut down green competition, but I think there is more nuance than that. It seems like Trump may actually have a positive effect to the american job market, but this is only the case in theory. In theory he keeps foreign solar panels out to save American jobs and solar companies. But I believe this is actually taking money out of the green energy business. A better alternative would be to give subsidies to the American solar panel industry with hopes to develop better solar panels that can compete on the open market.
Tariffs do not have a positive effect on the U.S. job market. Like any government regulation it helps a small group of people but spreads the negative effects widely.
The 'problem' here is that China is subsidizing solar panels to market to other countries.
To make it easier to visualize why that's not a problem, say China was giving us solar panels for free. The Chinese government would be losing money and essentially giving away resources for free. But Americans would be able to put solar panels on their house for free, allowing them to spend the money they would spend on solar panels and electricity elsewhere, increasing the American market. The solar panels they have + the money they spend in other industries gives a larger economic pie than buying solar panels from American companies but not having any money left over.
The same thinking applies if the Chinese government subsidizes them, we just get less benefit. If the U.S. solar industry cannot recover from this, there's no need for government intervention from either president.
It seems like placing a tariff on foreign solar panels would allow our industry to develop, but that relies on one factor that I do not see in our economy: demand. Few Americans are clamoring for solar panels, and of those that are paying the additional tariff does not seem futile. The American solar industry should be trying to catch up to its international competitors in the first place, and placing tariffs could in fact weaken their drive as they will have less motivation to develop new solar panels that are better than other models since their market will be less competitive. Instead of bolstering our economy, this step may just push us away from green alternatives for energy and back into the hands of fossil fuel companies.
In this case, I think that tariffs are not doing much to help the US economy grow, as there isn't exactly a high demand for solar panels, but is simply harming US citizens who want to purchase these solar panels. That being said, I don't think that tariffs are a bad thing, but I think that they clearly aren't the right solution to this issue of solar panels, especially because the usage of solar panels as alternative energy should be encouraged.
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