Unintended fallout of Trump steel tariff: Solar going abroad

WASHINGTON imposed a tariff on steel imports last year to get companies to buy more American metal. In some ways, the duty has the US solar business doing the exact opposite.

Consider the case of PanelClaw Inc., a supplier of steel racks that hold solar panels in place. Since President Donald Trump slapped tariffs on steel and aluminium last year, the company has boosted its sourcing of completed racks from India, allowing it to skirt some of the duties that apply to raw metals only.

While PanelClaw still acquires racks made in the US with American steel, the company can partly “avoid the tariff” by importing the rest, Chief Executive Officer Constantino Nicolaou said in a telephone interview.

PanelClaw isn’t alone. California-based Nuance Energy, another solar-racking company, has also boosted overseas sourcing, including from China, Malaysia and Mexico, since the steel tariffs were imposed. Increasing overseas sourcing further is “on the table” if tariffs rise, Chief Executive Officer Brian Boguess said by phone.

Here’s the downside: looking overseas won’t boost US jobs. “We like creating jobs locally,” Nicolau said. But “the luxury became much more difficult with the steel tariff.”

Steel prices for US buyers rose about 14 per cent last year after Trump, contending that foreign metal threatened US national security, slapped tariffs on all steel imports under Section 232 of the Trade Expansion Act of 1962. Tariffs raise the price of imports to make them on par with domestic goods.

Unlike other commodities, steel is priced regionally. So American steel costs about 44 per cent more than Chinese steel and about 31 per cent more than European steel, meaning US metal is the most expensive in the world right now. — Bloomberg