Thoughts on Chinese Solar Tariffs

We have the classical conflict between manufacturers and contractors. Contractors don’t really care where the product comes from.  They want the cheapest product so they can sell the most.

Manufacturers want good prices for their products so they can stay in business.

In the end, the competing forces will favor the contractors, just as it has globally with Chinese goods displacing local goods, with local manufacturers going out of business.

How to balance the two is the question.  Is the American citizen better served with low cost alternative energy from Chinese products and loss of American industry, or better served with higher cost alternative energy, increased American manufacturing, and less penetration of the market?

This is where the government steps in with whatever solution. It has to look down the road and see what the future brings.   If energy security, reduced pollution, and American industry are the top priority, then the government can issue rebates, credits, and mandates, as in most of Europe.  An “incentivized” industry will add jobs in manufacturing and construction, but at the cost of higher energy prices.  We have had policies like this in place for many decades relative to conventional energy sources, even though we have slipped into complete dependence on foreign energy sources.  We have only recently re-incentivized alternative energy sources.

If low cost energy is the only consideration, then drill baby drill, and let the Chinese run free.  This will result in jobs in construction, little or none in manufacturing, and lower energy prices (or lower rate of increase).

No consumer wants to pay higher energy prices, so they will not voluntarily choose this path.  Only government action can make this happen for reasons that trump energy prices.  Sticker shock can be lessened with gradual readjustment of our energy sources.  Social psychologists have known for a long time that people will accept higher prices if they are gradual, so there is time to adjust.  I remember when people were screaming as gas approached $2/gallon. Now they would be very happy to get back to $3/gallon.

Dr. Ben