Little benefit to US solar as Trump lifts Canadian steel and aluminum tariffs

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From pv magazine USA.

The headlines are nice but as Costa Nicolaou, CEO of mounting system manufacturer PanelClaw told pv magazine:

The damage is done by the global tariffs. There is no incentive for the Canadian steel suppliers to drop their prices to 2017 levels.

When people outside the solar industry think of solar manufacturing, they picture factories churning out cells and modules. But those are just two elements that go into solar installations and a significant portion of the many other components needed to make a PV system work are produced in the United States.

That includes the systems on which the PV modules are mounted – whether on roofs or in large ground-mounted arrays that track the sun. This segment of the solar manufacturing supply chain is particularly well represented in the United States, and it has suffered under the tariffs imposed by the Trump administration.

That was true not only for the Section 201 tariffs applied to cells and modules – and widely opposed by the sector – but even more so for the Section 232 tariffs on steel and aluminum. Those tariffs, announced a year ago, had a minimal effect on the overall cost of PV installations but hit the racking, tracking and mounting system makers who depend on such raw materials.

The global nature of the tariffs meant those countries whose exports were affected included Canada, one of the U.S.’ closest trading partners. Last year Canada was the largest source of imports of both materials, supplying 19% of the steel and a third of the aluminum imported by the U.S.

On Friday, the Trump administration reached a deal with Canada to eliminate the Section 232 tariffs on steel and aluminum. In turn, Canada agreed to remove retaliatory tariffs as part of the renegotiation of the North American Free Trade Agreement. However, as long as global tariffs remain, manufacturers say prices for raw materials will stay high.

Trade flows

There is also the question of how such tariffs are affecting U.S. manufacturing. While PanelClaw’s Nicolaou noted it is hard for many racking, tracking and mounting system companies to move factories, the tariff landscape does influence decisions about future manufacturing locations. Companies are aware that if they make products outside the U.S. they can get steel and aluminum without tariffs and then ship products into the U.S. tariff-free – a situation that flies in the face of Trump’s “America first” trade policy.

The deal announced on Friday committed the U.S. and Canada to collaborate on a process to monitor the steel and aluminum trade between them. If imports exceed historic volumes of trade, the importing country can still impose 25% duties on steel and 10% on aluminum for individual products.

For Nicolaou and other manufacturers, however, the chief aim is the removal of global Section 232 tariffs. “Lifting … tariffs is a good thing overall,” said Nicolaou. “If the global tariffs are removed then we will see a return to the prices we saw in 2017 before the tariffs were imposed.”