The Point of Tariffs on Solar Panels Made in China Was to Raise the Price

Print
Tuesday, 13 August 2013 04:23

The Post had a somewhat confused editorial about the imposition of tariffs on solar panels made in China. The argument for the tariffs is that China subsidizes its panels leading to unfair competition. As the editorial correctly notes, the determination of whether the panels are subsidized is not easy. (Panels sell for less than average cost, but well above marginal cost.)

However the editorial notes a counter-tariff imposed on a key material input imposed by China and then tells readers:

"Tariffs on both sides, meanwhile, promise to push up the price of solar equipment in the United States."

Of course raising the price of solar equipment in the United States was the goal of the U.S. tariff, not an unexpected outcome as the Post seems to imply. The real questions on the tariff is what the long-run picture for the industry will look like if China continues its current policy unchecked. (Do we think they will get a near-monopoly and then jack up prices?) And second, are protective measures worth the cost of slowing the spread of solar energy, even if it might lead to a somewhat stronger domestic industry? These basic issues do not appear in the Post's editorial.