For today’s homes and businesses, solar panels mean safer, cleaner, and more environmentally friendly energy. For the solar industry, however, the recent solar tariff means major changes—and those changes could end up trickling down to the consumer. At least, that was the word earlier this year when President Donald Trump announced that his administration would be imposing a 30% tariff on all imported solar products.
The announcement created a significant stir within the solar industry, along with heated debate over the wisdom of the move. For most people, however, the news of the tariff brought only confusion. If you are thinking of purchasing a solar installation for your home or business, you may be wondering what, if any, impact the new tariff will have on your decision.
Here are some of the most commonly asked questions about the solar tariff—along with the answers.
What is the new solar tariff?
A tariff is a tax on imported or exported goods. In this case, the tariff is on imported goods—specifically, solar equipment. The Trump administration announced on January 22 that the U.S. would levy a 30% first-year tariff on all solar cells and modules.
What imports will be included in the solar tariff?
The country that is likely to be most affected by the tariff is China, which produces more photovoltaic panels and other solar equipment for the world market than any other country. Indeed, in the wake of the announcement, China stepped up shipments of its solar panels—understandably, since customers who had previously bought solar equipment did not want to pay a tax that had not existed when they originally made their purchase. The tariff affects imported goods from all countries except for those that are designated as developing nations, such as India.
When does the new solar tariff take effect?
The tariff has been in effect since February 7, 2018.
How much is the new solar tariff?
Technically, the new policy doesn’t include just one tariff, but several. The first year that the tariff is in existence, it will levy a 30% tax on solar imports. In its second year, the tariff drops to 25%. In the third year, the tariff goes down to 20%. And in the fourth and final year, the tariff will be 15%. After that, it ceases to exist. However, the tariff also stipulates that 2.5 gigawatts’ worth of solar equipment will be exempted per country every year.
How much will the new tariff actually affect the price of solar equipment?
To answer this question, it’s important to understand the nature of this particular tariff. When the U.S. government passes a tariff, the tariff is measured in terms of percentage or fixed dollars. For example, a fixed dollar tariff of $30 would simply be a $30 tax. However, a tariff of 30% would change depending on the current cost of the product. In this case, the solar tariff is a percentage tax, which means that its effect changes along with the fluctuating cost of the products it taxes.
The price of solar panels has been going down for years, which is one of the reasons behind the domestic solar installation boom of the past decade. What this means is that the impact that the tariff has on the price of solar products will diminish as that price continues to shrink. Since the tariff itself will decline by 5% with every passing year, many industry insiders are predicting that the tariff will have a noticeable impact at first, but that its actual effect will be short-lived. In other words, the tariff will be something like a summer storm—noisy, but fleeting.
Will the tariff affect the price of my solar installation?
Probably not significantly. Keep in mind that solar panels make up only part of the overall cost of a solar installation, and that many solar manufacturers will be adjusting their prices to make up for the tariff. This, combined with the fact that the tariff is temporary and will have a reduced effect every year, makes it unlikely that the tariff will have a major impact on the price of residential and commercial solar installations. If you have any concerns, feel free to talk to a solar expert in your area.
Are you considering making the switch to solar? Custom Solar and Leisure specializes in high-quality solar installations for homes and businesses in Tucson, including solar water heaters. We are proud to carry an A+ rating with the Better Business Bureau, and our company is a founding member of the Southern Arizona Solar Standards Board. If you have any questions for our solar experts, you can reach us at (520) 314-3768.