Photovoltaic Double Anti-US Trade War Results

1. The latest trade war dynamics

The global market is thinking: What will happen with the escalation of the Sino-US trade war?

On August 1, Trump announced that if China and the United States did not reach a trade agreement before September 1, he would impose a 10% tariff on $300 billion of Chinese imports. The new round of tariffs is a supplement to the current tariff of 25% of the $250 billion Chinese imports.

Soon, China announced that Chinese companies would suspend the import of US agricultural products and would no longer waive the tariffs to retaliate against further tariffs on agricultural products imported from the United States. Then the United States announced that it would delay the new round of tariffs until the end of the year. The US Treasury Department listed China as a "currency manipulator",...

Trade tensions between the world’s two largest economies have already had an impact on the global economy.

China and the United States should learn from the trade war in the photovoltaic industry and foresee the future of the two countries.

2. Take history as a mirror

In fact, in fact, the world only needs to look at the photovoltaic industry to know that both China and the United States have learned the lesson. The Sino-US PV supply chain has been hampered by various tariffs, and the damage caused by the trade war has jeopardized all relevant countries.

The United States used to be the home base for photovoltaic cell and component manufacturing, accounting for about a quarter of global solar module shipments at the turn of the century. However, after entering the 21st century, the rise of China's photovoltaic manufacturing industry has changed the global PV supply pattern, and with the rise of Chinese brands, the market share of PV modules manufactured in the United States has dropped significantly, which directly led to the next seven years of PV trade war.

★ In 2012, the US Department of Commerce announced the first round of anti-dumping and countervailing duty (AD/CVD) on PV modules imported from China.

★ In 2014, the United States made a double reversal of Chinese manufacturers and imposed new tariffs on Taiwan's photovoltaic cell manufacturers. They are regarded as Chinese manufacturers and are backing the way to avoid tariffs in 2012.

★ In January 2018, shortly after Trump took office, he initiated Article 201 and imposed a 30% tariff on solar panels imported from China for a period of four years.

★ In September 2018, the Trump administration launched Section 301, which imposed a 10% tariff on $325 billion of Chinese imports, including photovoltaic modules, inverters, junction boxes, and backplanes.

★ In May 2019, the Trump administration raised the tariff level of Section 301 from 10% to 25%.

3. Three lessons in the PV trade war

The PV module supply chain between the US and China is full of trade barriers. Three lessons can be learned from the PV trade war, let us know what the broader trade tensions will bring.

Lesson 1: Tariffs increase the price of American consumers

Tariffs will not only increase the purchase price of goods, but also cause supply shortages, which will further push up prices. In today's US PV market, the evidence is clear, where the price of PV modules is 20% higher than the major European markets, 40% higher than Japan and 50% higher than China.

Therefore, American consumers must be prepared to pay higher prices for products such as shoes, toys, and smartphones because the tariffs on these Chinese goods lists are as high as 10%.

Lesson 2: Tariffs have effectively achieved the initial promise: damage to the target country’s exports

As tariffs are in place, PV module manufacturers in China and Taiwan find it uneconomical to sell directly to the US. They were forced to transfer manufacturing capacity to Southeast Asian countries such as Vietnam and Malaysia. This has a large impact on their normal business operations. Chinese and Taiwanese manufacturers have to weigh the lowest cost of production in the country and the duty-free but costly production environment in Southeast Asia. This directly leads to a reduction in domestic enterprise investment, a reduction in employment opportunities, a decline in the GDP of the solar industry, a complex manufacturing process, and an increase in manufacturing costs.

Similarly, if a 10% new tariff on consumer goods comes into effect, people may see a similar situation: China’s economy will be hit, which may be more powerful than the PV trade war, because of some manufacturing capacity and related capital. Will move from China to other low-cost countries.

However, the difference is that not only Chinese companies must re-adjust their manufacturing strategies, but US and Nike, such as Apple and Nike, must also carefully examine their production operations in China. The expensive decisions to transfer their business to other countries may have to bypass tariffs. The end result: The trade war is like a tug-of-war game - tariffs lead to more tariffs.

Lesson 3: Photovoltaic double-reverse does not protect US PV manufacturing

Shortly after the first round of AD/CVD tariffs were imposed in the United States, China imposed tariffs on polysilicon made in the United States, which is a key raw material for photovoltaic cell manufacturing. Revenge Tariffs After the past seven years, the United States has seen a sharp decline in its polysilicon industry starting from the double-reverse. US silicon exports to China have fallen sharply. However, from 2012 to 2018, China's domestic production increased from 93,000 tons to 254,000 tons. China's polysilicon manufacturing costs are already the lowest in the world, and technology is leading the world.

REC Silicon, the world's three largest silicon producers, was forced to announce that if China does not cancel polysilicon tariffs, it will close one of its two plants in the US this year.

Hemlock, once the world's largest polysilicon manufacturer, invested billions of dollars in new polysilicon plants in Tennessee because of its optimistic PV market. Because of the US double-reverse, it was directly closed after the factory was completed and commissioned. The original two polysilicon production lines at its headquarters also maintained only one production line because of the US double-reaction to China PV.

In the seven years of PV double-reverse, the US PV module manufacturing can only meet 30% of the US domestic demand, and the cost is much higher than other countries' manufacturing costs. Most of the products still rely on imports.

4. Photovoltaic double reverse or let the United States lose helplessness

Trade wars may also cause the United States to lose faith in the world

Since the United States implemented the PV double-reaction against China, China has repeatedly initiated an appeal at the WTO and received support from the WTO:

1. In 2012 and before the United States launched a dual-anti-China policy involving crystalline silicon photovoltaics, China initiated the WTO dispute settlement procedure, requiring the US to violate the regulations;

2. In 2014, the WTO determined that the US violated the rules and required it to be corrected, while the United States refused to obey and enforce the WTO ruling;

3. In 2016, China sued the US in the WTO for failing to implement the WTO ruling, and it is still in violation of regulations;

4. In 2018, the WTO continued to recognize that the United States does still have violations and requires it to be corrected;

5. The United States is still dissatisfied and filed an appeal in the same year;

6. Therefore, on July 16, 2019, the WTO made a final ruling, which was considered as a return to the US appeal. It was found that the US “counter-subsidy investigation” on Chinese related products violated the WTO regulations. Reiterating the United States to enforce the ruling;

7. After the ruling, the Office of the US Trade Representative (USTR) accused the WTO of rulings in violation of WTO rules in a statement. It also claimed that the WTO's ruling harmed the interests of American workers and businesses and distorted the world. Market and so on.

Looking back at the whole process, I think of the whole process of Sino-US trade wars (double-reverse, 201, 301, etc.), which can clearly reveal the words and deeds of the American rogue: it is simply two words, and the ruling is good for me, I will implement it. I am not doing it against me.

However, today's WTO is not the WTO that was originally initiated by the United States, and the United States has no veto power. Under the participation and supervision of the whole world, the WTO stands on its independent stand and judges the US violations again and again. Not only that, when the United States accused China of being a currency manipulator in a recent trade war, the latest report of the International Monetary Fund (IMF) directly hit the United States, denying the US.

5. From the PV double anti-forecasting the future of Sino-US trade war

As a practitioner who is deeply involved in the history of photovoltaics for seven years, the author can predict that the Sino-US trade war will continue. The United States will not only lose the trade war itself, but also lose its existing economic advantages and let China’s The weak industry has risen rapidly (like Huawei), and the United States will lose its most basic international reputation.

In the end, it is not only the result of the PV trade war, but more likely that China will use the WTO rules to retaliate and claim for the US PV dual-reverse policy after the WTO authorization. A few years later, China Retaliation and even claims will be made in the trade war provoked by the United States this time.