“One way or the other, it’s hard not to imagine this will not end in a price increase,” said Shayle Kann, senior vice president at GTM Research. And because the anti-subsidy tariffs were set higher than most people in the industry expected, “it will not be a negligible price increase,” he added.
The Solar Energy Industries Association called the tariffs “damaging” for U.S. consumers, and said they will slow the adoption of solar power in the U.S.
Some stocks emerged as beneficiaries right away. SunPower Corp. /quotes/zigman/7312465/delayed /quotes/nls/spwr SPWR and First Solar Inc. /quotes/zigman/102025/delayed /quotes/nls/fslr FSLR , U.S-based manufacturers, rallied on Wednesday, with shares up 4.8% and 9.3%, respectively. Their products will be more competitive with the products made by the low-cost Chinese producers.
SunEdison Inc. /quotes/zigman/17430636/delayed /quotes/nls/sune SUNE shares rose 3.6% — the company is in between the winner and loser camps, as it is a buyer of Chinese modules but also a manufacturer. Shares of SolarCity Corp. /quotes/zigman/13139813/delayed /quotes/nls/scty SCTY declined 0.7% — the U.S. largest solar installer buys a lot of Chinese modules, and making the modules more expensive is bound to have some impact on the company’s bottom line.
Likewise, losers surfaced right away: among China-based solar-panel manufacturers, Yingli Green Holding Co. /quotes/zigman/467021/delayed /quotes/nls/yge YGE bore the brunt of the selloff, with its U.S.-listed shares down 4.8%, but all U.S.-listed shares of Chinese manufacturers stumbled.
The dispute started when SolarWorld Industries America Inc., the U.S. subsidiary of SolarWorld AG, started lobbying the federal government for an investigation into duty evasion late last year.
The U.S. imposed duties of up to 36% on Chinese solar products in 2012 after concluding the companies had received unfair subsidies from the Chinese government and sold products in the U.S. market below cost, but the duties didn’t include solar panels made with solar cells assembled in other countries.
After 2012, most Chinese companies had been making their wafers, the first step, in China, then produced solar cells, the building block of a solar panel, primarily in Taiwan, and finished off their solar panels back in China.
The Commerce Department set up preliminary duties between 18.56% to $35.21% late Tuesday, but don’t let “preliminary” fool you — tariffs will be collected right away. And Commerce won’t stop there — a decision on dumping of Chinese solar products is expected in late July, and dumping any duties would be on top of the preliminary duties addressed Tuesday.
China’s Ministry of Commerce said it is “strongly dissatisfied” with Tuesday’s decision. The move “is an abuse of trade remedies, has an obvious hint of trade protectionism and will inevitably lead to the escalation of trade disputes between China and the U.S.,” the ministry said in a statement on its website, according to The Wall Street Journal.