Trump imposes tariffs on imported solar equipment

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Earlier this week, President Donald Trump announced a 30 percent tariffs on imported solar equipment in an effort to encourage domestic production.

The tariffs are predicted to increase prices and kill over 20,000 jobs, according to the Solar Energy Industries Association. In addition to helping domestic production, it is also a part of Trump’s plan to have a more aggressive strategy toward China.

“We don’t have manufacturers opening up plants because of tariffs,” says Arizona State University Economist Dennis Hoffman. “We want manufacturers playing plants and putting people to work because of efficiencies.”

Hoffman says the analysis shows an attempt to eliminate trade deficit based on merchandise and goods but does not include services. He says the tariffs are going to dissuade trade and may create a reaction for trade wars. Hoffman is also concerned that it will lead to inflation.

“Taking away efficient consumer choice is a job-destroying move,” says Hoffman. “This is where the jobs get lost. I have a lot less money to spend. If we’re going to impose tariffs like that we have far less dollars to spend locally on services, on local businesses.”

With Arizona being a state that hardly sees a day without sunshine, it’s hard to believe that it doesn’t take the lead with producing solar energy. Hoffman says the notion of protectionism that runs deep in the current administration may be something to worry about.

TED SIMONS: PRESIDENT TRUMP HAS IMPOSED A 30% TARIFF ON IMPORTED SOLAR EQUIPMENT SUPPORTERS OF THE MOVE SAY IT LEVELS THE PLAYING FIELD FOR U.S. MANUFACTURERS BUT THE SOLAR INDUSTRY SAYS THE TARIFF WILL STUNT GROWTH AND COST TENS OF THOUSANDS OF JOBS AND JOINING US IS DENNIS HOFFMAN OF THE INSTITUTE AT ASU-WP CARRY SCHOOL AND TARIFF 30% AND INCLUDES WASHING MACHINE AND I WANT TO STICK TO SOLAR IN ARIZONA HOW BIG IS THIS ON THE INDUSTRY.

DENNIS HOFFMAN: VERY BIG AND THE INDUSTRY NUMBERS I THINK IT WAS 23,000 IT'S NATIONALLY. BUT THERE IS A LOT OF COMPLEXITIES HERE TED WITH RESPECT TO SOLAR. I'M NOT AN EXPERT IN THE SOLAR PANEL TECHNOLOGY BUT THERE IS DIFFERENT BREEDS OF PANEL THIS AFFECTS AND IT DOESN'T AFFECT ALL BUT IT IS AN ATTEMPT BY THE ADMINISTRATION TO ENCOURAGE DOMESTIC PRODUCTION, YOU KNOW, ANOTHER DOMESTIC PRODUCTION. I THINK IT'S GOING TO INFLUENCE UTILITY SCALE INSTALLATION MORE THAN THE DISTRIBUTED SOLAR BUT THERE IS A LOT OF FRAMING, A LOT OF INSTALLATION JOBS THAT WOULD BE AT PLAY, NOT TO MENTION THE FACT THAT HIGHER COSTS FOR RENEWABLES WHICH WE ARE ENCOUNTERING AS CREDITS ROLL OFF AND JUST MAKES IT MORE DIFFICULT TO EXPAND THIS SOLAR INDUSTRY THAT MANY PEOPLE HAVE POINTED TO TO, YOU KNOW, DEAL WITH GREENHOUSE GASSES AND POLLUTION.

TED SIMONS: HOW RELIANT IS THE INDUSTRY ON FOREIGN MADE EQUIPMENT?

DENNIS HOFFMAN: VERY RELIANT.

TED SIMONS: SO IF YOU WANT.

DENNIS HOFFMAN: AN INTERESTING THING TWO DAYS AFTER THE IMPOSITION OF THE TARIFF A SMALL CHINESE MANUFACTURER OPENED UP A SOLAR PLANT IN FLORIDA SO YOUR FIRST THOUGHT IS OH, IT'S WORKING, IT'S WORKING. BUT YOU KNOW IF YOU'RE GOING TO OPEN UP A PLANT TWO DAYS AFTER IN THIS HAS BEEN IN THE WORKS FOR MONTHS, OBVIOUSLY THE SITE SELECTION, ALL THIS KIND OF THING. AND WE DON'T WANT MANUFACTURERS OPENING UP PLANTS BECAUSE OF TARIFFS. YOU WANT MANUFACTURERS PLACING PLANTS AND PUTTING PEOPLE TO WORK BECAUSE OF EFFICIENCIES. IF YOU RELY ON TARIFFS WE ALL PAY MORE, TED, IF WE ALL PAY MORE BAD THINGS HAPPEN.

TED SIMONS: ALL RIGHT, BUT BE THAT AS IT MAY THE ADMINISTRATION SAYS AND THIS IS THE PHRASE LEVELING THE PLAYING FIELD AND WE HEAR THAT IN A LOT OF THINGS.

DENNIS HOFFMAN: FAIR TRADE.

TED SIMONS: FAIR TRADE AND IT'S FLOODING THE MARKET WITH THIS STUFF AND AMERICAN MANUFACTURERS HAVE NO CHANCE FIRST OF ALL WILL AMERICA MANUFACTURERS FILL THE BREACH AND SECONDLY IF SO WILL THOSE PRICES START COMING DOWN?

DENNIS HOFFMAN: WELL, IT'S UNCLEAR THAT WE HAVE EITHER THE INTEREST OR THE CAPACITY AT THIS POINT TO IMMEDIATELY SEASON AN OPPORTUNITY LIKE THIS. BUT THE POINT IS THIS WHOLE ANALYSIS OF TRYING TO ELIMINATE THE TRADE DEFICIT WHICH IS BASED UPON MERCHANDISE GOODS AND DOESN'T INCLUDE SERVICES, DOESN'T COUNT WHERE PARTS OF THE PRODUCT WERE PRODUCED, SO IT DOES NOT TAKE INTO ACCOUNT VALUE ADDED IT'S JUST WRONG HEADED TO FOCUS ON TRADE BALANCES TO DETERMINE WINNERS AND LOSERS FROM TRADE. SO WE COULD PROTECT A HANDFUL OF JOBS BY IMPOSING TARIFFS ON WASHING MACHINES OR SOLAR PANELS TED AND WILL PROTECT THE REST OF US FROM LOW PRICES AND THAT HAS REAL IMPACT.

TED SIMONS: I WAS GOING TO ASK WHEN YOU TALK ABOUT THIS AND THE BAD THINGS THAT COULD HAPPEN HOW BAD OF AN INFLATION THING COULD HAPPEN?

DENNIS HOFFMAN: IT'S DEFINITELY GOING TO KINDLE INFLATION WE SAW WHAT HAPPENED TO EQUITY MARKETS WHEN THEY GOT A WHIFF OF INFLATION ON FRIDAY, LOTS OF STABILITY TODAY WHICH IS GOOD TO SEE. BUT TAKING AWAY EFFICIENT CONSUMER CHOICE IS A JOB DESTROYING MOVE. HERE IS WHERE THE JOBS GET LOST, IT'S NOT NECESSARILY IN EXPORTS DUE TO TRADE WARS ALTHOUGH THAT IS PART OF IT. I HAVE A LOT LESS MONEY TO SPEND, IF I HAVE TO SPEND MORE ON AIR CONDITIONERS, ON WASHING MACHINES ON SOLAR PANELS, ON AUTOMOBILES GO TO MEXICO THERE IS A 70% TARIFF ON ELECTRONICS IN MEXICO. IF WE ARE GOING TO IMPOSE TARIFFS LIKE THAT WE HAVE FAR LESS DOLLARS TO SPEND LOCALLY ON SERVICES, ON LOCAL BUSINESSES.

TED SIMONS: THIS TARIFF SOLAR PANELS AND WASHING MACHINES THIS IS A START HERE BUT COULD THIS WIND UP IN FRONT OF THE WORLD TRADE ORGANIZATION?

DENNIS HOFFMAN: SURE. AND IT ALSO IT CREATES THIS REACTION FOR TRADE WARS. YOU KNOW, THIS KIND OF RUNS DEEP IN ME. I GREW UP IN MICHIGAN IN THE 50s AND 60s AND I HEARD THIS OVER AND OVER AGAIN, WE'VE GOT TO PREVENT FOREIGN COMPETITION AND LOOK AT THOSE HONDA CIVICS, THOSE RICE BURNING CARS I WAS TOLD. I DIDN'T EVEN QUITE GET THAT. BUT THE POINT WAS IT'S GOT TO PROTECT GM, GOT TO PROTECT THE UNION JOBS, GOT TO SAVE AMERICAN MANUFACTURING AND WHAT THAT DID IS IT PRECLUDED U.S. AUTO MANUFACTURERS FROM GETTING EFFICIENT AND PUTTING QUALITY INTO THOSE VEHICLES FOR DECADES. SO IT IS A LOSER ACROSS THE NATION.

TED SIMONS: SO WHEN PEOPLE SAY THE SOLAR INDUSTRY COULD BE STUNTED BY THIS, COULD BE SLOWED BY THIS ESPECIALLY HERE I STILL DON'T UNDERSTAND WHY ARIZONA IS NOT THE WORLD LEADER IN SOLAR BUT WE CAN GET INTO THAT SOME OTHER TIME.

TED SIMONS: THAT'S RIGHT. WE ARE NOT GOING TO MAKE ANY STRIDES ON SOMETHING LIKE THAT WITH A TARIFF IN PLACE IS THAT WHAT YOU'RE SAYING?

DENNIS HOFFMAN: THAT'S RIGHT, LOOK MARKETS WILL FIGHT THROUGH TARIFFS AT SOME LEVEL AND THERE WILL STILL BE SOME SOLAR INSTALLATION YOU JUST ARE DISCOURAGING IT, WHY WOULD YOU WANT TO DISCOURAGE A PRODUCT LIKE SOLAR IN A STATE LIKE ARIZONA.

TED SIMONS: YOU THINK THE PRESIDENT WILL REVERSE IT HE CAN REVERSE IT ANY TIME HE WANTS.

DENNIS HOFFMAN: THIS NOTION OF PROTECTIONISM USUALLY RUNS DEEP IT SEEMS IN THE CURRENT ADMINISTRATION TED AND THAT'S THE PIECE OF THIS THAT IS REALLY WORRY SOME TO ME. I THINK THAT AMID ALL OF THE RHETORIC THAT I'VE HEARD OVER THE LAST YEAR AND EVEN IN THE CAMPAIGN, IT'S PROTECTIONISM THAT I THINK WE NEED TO BE THE MOST CONCERNED ABOUT.

TED SIMONS: WOW, GOOD STUFF, GOOD TO HAVE YOU HERE NICE SEEING YOU.

DENNIS HOFFMAN: GREAT TO BE HERE TED.

DENNIS HOFFMAN: THANKS.

Dennis Hoffman: ASU Economist

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