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Economist: Solar tariff likely to breed Chinese backlash on ag

WASHINGTON, D.C. — In California, more than half of paid generated energy is used to move water. In pumping groundwater, moving it around fields for irrigation or providing drinking to herds, agriculture is a primary user of energy.

With recent regulation changes in the state, many farmers have small areas of non-arable land covered in solar panels. But with a 30 percent tariff on solar panels and other equipment, Erin Huston, federal policy department for the California Farm Bureau Federation, said she isn’t sure farmers will be able to continue to install the panels.

Last month, President Donald Trump announced an immediate tariff of 30 percent to be placed on most imported solar modules, in a stated effort to boost American manufacturing, with the rate declining before phasing out after four years. Congress has no authority to review or veto his action, according to a report by CBS News.

Solar energy on farms is difficult to track, said Alexandra Hobson, director of external communications for the Solar Energy Industries Assoc. (SEIA). Power companies will not share that data. However, utility-scale solar installations require large areas of land, and about 60 percent of solar capacity is from utility-scale installations, enough to power nearly 6 million homes.

Mary Lovely, visiting Fellow at the Peterson Institute for International Economics and a professor of Economics at Syracuse University, said when the United States imposes regulations or tariffs on China, the Chinese typically retaliate on U.S. agriculture.

Earlier this month, China announced an investigation into U.S. sorghum subsidies. Lovely said this is the first sign of retaliation.

“To the best of my knowledge, sorghum is farmed largely for export to China and being locked out of that market will hurt farmers badly. The fear is that they will target soybeans yet. China is the largest export market for U.S. soybean farmers,” she said.

With Brazil expected to have a larger crop of soybeans than normal, with a higher protein quality and competitive price, it already seems likely the U.S. share of that market will decline in China.

China is the largest producer of solar panels in the world. The U.S. has already imposed tariffs on Chinese-built solar equipment. Lovely said the Chinese companies built factories in other countries to get around the tariffs.

The new global tariffs are still aimed at the Chinese companies, she said, but the number of production jobs that might be realized in the United States will not make up for the jobs lost.

In 2012, the U.S. put restrictions on Chinese imports of solar cells. In retaliation, three U.S. companies were blocked from the Chinese market, while one Chinese company canceled plans to build a factory in Tennessee and another company cut 30,000 jobs.

As a result of the tariff, fewer solar panels will be imported, which means roughly 23,000 fewer jobs in the solar industry in the U.S. this year. According to SEIA, Ohio will likely lose 195 jobs this year. There are 270 solar companies, related to manufacturing, installers and others. Currently, enough solar energy is produced in the state to power over 18,000 homes.

In Indiana, 183 jobs this year will likely be lost in the 94 solar companies in the state. Almost 31,000 homes are powered by solar. About 308 jobs are expected to be lost in Illinois, where 327 companies help power 12,500 homes.

More than 16,000 homes in Michigan are powered by solar; 225 companies in the state are likely to lose 433 positions. Wisconsin will lose about 70 jobs this year in 192 companies, powering about 6,500 homes. Prior to the tariff, annual solar installations over the next five years were expected to jump dramatically, to 140 new installations in 2021.

About 85 jobs in the 126 Missouri solar companies are expected to be lost this year. Almost 17,000 homes are powered by solar power in that state.

“The decision to impose 30 percent tariffs on imported solar cells and panels is a loss for America. The tariffs, which just went into effect, will result in the loss of roughly 23,000 American jobs and the delay or cancellation of billions of dollars in solar investments,” Hobson said.

“Those jobs are spread out across the country, from our coastal states and urban areas to the rural farmlands of America.”

Right now there are only two companies in the United States that make solar panels on a large scale, and both are foreign-owned. SolarWorld America and Suniva may both be for sale. Reports of new factories being built have been unconfirmed.

"We suspect that any new capacity would not come close to meeting demand for panels and that we will continue to need a large number of imported panels,” Hobson said.