Solar Avoids an Eclipse

The sun was shining on the U.S. solar industry Tuesday, as a key trade panel recommended that President Trump impose a smaller-than-feared tariff on solar cells.

That means that the solar boom that has convinced more than 1 million U.S. homeowners to put panels on their residences is more likely to continue (though perhaps at a slower rate than it has in the past couple of years). It’s good news for companies that finance and sell solar panels to homeowners like SunRun (RUN) and companies that make solar panels overseas, like SunPower (SPWR), JinkoSolar (JKS) and JA Solar (JASO). It’s bad news for First Solar (FSLR), a U.S. company whose special technology would be exempted from tariffs -- thus making its products more attractive in the event of a high tariff. First Solar shares were down 9% on Tuesday, but they had risen 20% on strong earnings last week.

On Tuesday, the U.S. International Trade Commission recommended a tariff of up to 35% on solar modules, which comes to about a 10-cent surcharge at current rates of 32 cents a watt. The companies that want the tariff has asked for a 32-cent tariff (100% at today’s rates), along with other remedies.

This is a tricky issue, one we covered in a cover story a few weeks ago. In short, two U.S. solar manufacturers are asking Trump to impose tariffs on foreign solar manufacturers. Those tariffs would make it more expensive to import solar panels. Cheap foreign solar cells, mostly made by Chinese firms, had made it possible for companies in the U.S. to offer solar roofs at rates below fossil fuel powered sources like coal and natural gas, after accounting for special tax breaks. So any tariffs would imperil that business.

But in the end it’s up to Trump to determine whether to impose tariffs, and how large they’ll be. He’ll be making his choice by January. There could be lots more stock action between now and then.

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