Solar stocks rally as U.S. tariffs not as high as feared.
Manufacturers in Asia shrug off new 30% levy
Solar companies from the U. S. to Asia were breathing a collective sigh of relief on Tuesday after U. S. President Donald Trump announced tariffs on U. S. imports that, at 30 per cent, were lower than most companies had feared.
In China and South Korea, panel makers had been bracing themselves for a bigger blow since October, when the U. S. International Trade Commission recommended a 35- per- cent tariff. JinkoSolar Holding Co., the world’s largest producer of solar panels and China’s biggest exporter, called the levy announced Monday “better than expected.” The main U.S. solar trade group, which has warned of massive job losses and billions of dollars of investments killed, said the decision showed “some restraint.”
The duties are the latest step by Trump that may undermine the economics of U.S. renewable energy, but they’re unlikely to raise costs of imported equipment far beyond recent levels. That’s because panel prices were already rising as the market priced in looming tariffs and some developers began hoarding. The duties also probably won’t be enough to deter some Asian imports or encourage companies to build more plants in the U.S., according to Bloomberg New Energy Finance.
A 30- per- cent tariff “isn’t that significant and they might give up those plans,” said Jiang Yali, a Hong Kongbased BNEF analyst. “If you compare building a new plant in the U. S. or in Southeast Asia, importing from Southeast Asia is still a better option.”
Trump s i gned an order imposing the tariffs in a White House ceremony Tuesday, declaring that the U. S. won’t be taken advantage of anymore. He predicted the duties would result in “a lot of plants built” in the U.S. and “a lot of workers, lot of jobs.”
While analysts including ClearView Energy Partners LLC have warned of greater risks to the energy industry if nations establish their own trade barriers against the U. S. in response, Trump said “there won’t be a trade war.” The only thing there will be, he said, are stocks rallying.
Indeed, U. S. rooftop panel installers Vivint Solar Inc. and Sunrun Inc. led solar s t ocks hi gher Tuesday. Vivint rose 6.3 per cent to US$ 3.78 at mid- afternoon in New York, after earlier climbing as much as 9.9 per cent. Sunrun gained as much as 8.8 per cent. They were among the biggest gainers in the Wilderhill New Energy Global Innovation Index.
But the rally was less because of the tariffs and more because they weren’t as bad as Wall Street projected them to be. The decision will increase installers’ equipment costs, but they’re lower than the industry expected, said Jeffrey Osborne, an analyst at Cowen & Co.
“It will be a relief to installers and not so bad for Asia’s exporters,” he said. “This wasn’t a nuclear decision from Trump.”
Solar- makers in China, the world’s biggest producer, have already spent years dodging trade bar- riers by shifting production to Southeast Asian countries including Malaysia, Thailand and Vietnam, that weren’t subject to the same levies. About 13 gigawatts, or one-tenth of Chinese companies’ capacity, is in the region, according to BNEF.
A 30- per- cent tariff on solar module imports would equate to an added cost of about 10 cents per watt, which would put the imported panels roughly on par with the current U. S. price, according to BNEF’s Jiang. The U. S. bought US$ 3.7 billion worth of panels in the first 10 months of last year, more than 90 per cent coming from Asia.
Canadian Solar Inc., which is based in Ontario and produces panels in Asia, and Shanghai- based panel maker ReneSola Ltd., initially rose Tuesday after the decision. ReneSola’s American Depository Receipts rose less than one per cent to US$2.81 at 1: 45 p. m. in New York. Canadian Solar closed down 0.8 per cent at US$ 15.64 after earlier rising as much as 2.1 per cent.
Major solar cells and module exporters will be affected by the tariff — especially Jinko, JA and Trina Solar Ltd. — but the impact will probably be limited to the short term since the tariff was expected, said Robin Xiao, an analyst at CMB International Securities in Hong Kong. Liu Yiyang, deputy secretary- general of China Photovoltaic Industry Association, said every nation will be affected by new tariffs, though they were in line with expectations.
THIS WASN’T A NUCLEAR DECISION FROM TRUMP.