Government policy shouldn’t pick which companies win and which companies lose. Instead, good policy fosters competition, which leads to better products and greater prosperity. When the politicians get involved, it usually leads to worse outcomes for businesses, workers, and consumers.
Take for example the case of SolarWorld and Suniva. The two solar panel manufacturers have not been as successful as foreign competitors in the marketplace and, rather than make changes to improve their products and services, the companies have instead petitioned for protective trade measures.
Suniva and SolarWorld recently filed a complaint with the U.S. International Trade Commission (ITC) alleging imports were causing harm to their buisinesses. The ITC unfortunately agreed last month, which sends the complaint to the White House where the President will make the final determination on whether or not to impose tariffs.
This should be concerning to taxpayers who have already poured billions of hard-earned dollars into the solar industry through subsidies – more than ten times all other forms of energy combined. That these companies cannot succeed with massive taxpayer support should be a huge red flag.
Now they want to make solar energy more expensive. The failing companies have called for a 25 cent per watt tariff on foreign imports of solar cells and a minimum price of 74 cents per watt, more than twice the current global solar cell price. Last year, solar panels sold for around 61 cents per watt in America, with some prices as low as 29 cents per watt.
Suniva and SolarWorld had their opportunity in the marketplace and are failing. It happens every day in all industries and it’s a feature of the free-market that improves products, eliminates inefficiencies, keeps prices down, and advances the human condition. For every Apple and Amazon, there are countless unsuccessful ventures that taught Steve Jobs and Jeff Bezos important lessons on what to do next.
Indeed, Suniva and SolarWorld are among more than 30 other American solar cell manufacturers in the last five years to declare bankruptcy. Some companies have adapted and moved into installing panels rather than manufacturing them. The panel installation sector is now booming.
Ironically, these tariffs could deeply damage the recent progress. The panel installing sector employs around 250 times more people in America than panel manufacturing. The Solar Energy Industries Association predicts that roughly 88,000 or one-third of panel installation jobs would be lost because of these tariffs.
In a formal letter to the ITC, the SEIA stated that imposing tariffs “would cause wide scale economic hardships on thousands of American workers and their families.” In addition, a bipartisan group of 16 senators and 53 congressmen also urged the ITC to reject the proposed protections. The ITC’s deadline to release their official recommendations is November 13, upon which President Trump will have 60 days to make a final decision.
Competition and innovation fuel the free market, which in turn gives businesses and consumers alike the freedom to choose which products to make and which to buy. The Trump administration should respect the features of the market that improve the lives of all Americans and reject these protectionist measures.