Tariffs could slow down Big Island solar installations

Hawaii solar installers and washing machine retailers might see a less successful year than anticipated after President Donald Trump approved tariffs on all imported solar cells and washing machines.

In an announcement Monday, the Trump administration revealed plans to impose a 30 percent tariff on all imported solar modules and cells, as well as a 20 percent tariff on the first 1.2 million imported residential washing machines. The tariffs will go into effect Feb. 7.

Although the tariff is framed as an effort to promote American solar manufacturers — “The President’s action makes clear again that the Trump administration will always defend American workers, farmers, ranchers, and businesses in this regard,” read a statement from U.S. Trade Representative Robert Lighthizer — many solar installers worry the imposition ultimately will harm the growing industry.

Jeremy Setbacken, owner of Off-Grid Solar Specialists in Kurtistown, called the tariff a “lame move,” saying the tariff will force most solar providers to increase their rates in order to stay competitive.

“I think this may push people away from going solar,” Setbacken said, saying the American solar manufacturing industry is not competitive enough for installers to switch to domestic manufacturers.

Off-Grid Solar Specialists had what Setbacken called a “good deal” for solar panels with South Korean conglomerate Hyundai, but Setbacken said he was informed by his distributor that the cost of all future shipments will be increased.

“It’s definitely going to slow us down,” Setbacken said.

Marco Mangelsdorf, owner of ProVision Solar in Hilo, said his company will be insulated from the effects of the tariff for the next several months thanks to a sizable inventory, but conceded he would, like most solar installers, be forced to raise prices eventually.

While Mangelsdorf was unconcerned for the future of his business, he was doubtful that the tariff will revitalize the American solar manufacturing industry.

Mangelsdorf said it is unlikely the tariffs will convince many investors to spend years building American factories. Because the tariffs decline over a four-year period — a 25 percent tariff in 2019, to 20 percent in 2020, to 15 percent in 2021 — the added cost of importing solar panels will be considerably less than it is now by the time any factory actually opens.

“It would take years and you’d have to spend hundreds of millions of dollars to reopen manufacturing facilities,” Mangelsdorf said. “I don’t believe investors will think it’s worth the risk.”

Mangelsdorf also expects many foreign manufacturers will apply for an exemption to the tariff. ProVision Solar, for example, procures panels from the Singapore branch of European solar company REC, which Mangelsdorf thinks will likely be granted an exemption based on previous U.S. International Trade Commission rulings.

A report from the International Trade Commission in October 2017 recommended that solar cells manufactured in Singapore be exempt from any tariffs, as such imports have a negligible impact on the domestic industry.

China and Taiwan produce more than 60 percent of the world’s solar panels.

Meanwhile, the tariff on washing machines stands to increase the cost of many residential washing machines this year. Already, South Korean electronics giant LG announced it will increase the cost of its washing machines, although representatives declined to go into detail about the planned price hike.

The washing machine tariff comes after a six-year lobbying effort by Michigan-based appliance manufacturer Whirlpool, who argued before the International Trade Commission that overseas competitors such as LG and Samsung were harming the domestic appliance market.

While the washing machine tariff also weakens over time — from 20 to 18 percent in 2019 and to 16 percent in 2020 — it also increases substantially each year after 1.2 million units are imported nationwide: After 1.2 million units arrive, the tariff increases to 50 percent this year, and to 45 percent and 40 percent in 2019 and 2020, respectively.

Because of this, consumers seeking a new washing machine might be well advised to purchase one sooner rather than later.

Email Michael Brestovansky at mbrestovansky@hawaiitribune-herald.com.