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Trump Twitter Storm: Impact on Sino-US Photovoltaic Industry
Trump Twitter Storm: Impact on Sino-US Photovoltaic Industry

Donald Trump's favorite news outlet, known as "Twitter Governance", is not a conventional press conference, but a more personalized, flexible, direct and convenient social media, Twitter. (Musk is also a good player in this respect.)

On May 5, the unpredictable President announced on Twitter his decision to raise tariffs worth $200 million from 10% to 25% on May 10. The whole world is debating whether this short 280-word tweet is his bargaining strategy on Sino-US relations or a threat to China. Although no conclusion has been reached, it does not prevent a Twitter from having a strong impact on China's A-share and cross-ocean shares the next day.

In the solar industry, we are concerned about the situation of the two countries, but we are also more concerned about how the solar industry, which is already at the center of the confrontation, can survive in the narrow gap of the Sino-US trade war.

The tax increase will undoubtedly affect many industries. From the reflection of A shares yesterday, nearly a thousand stocks in oil, electricity, medicine and other industries fell. What about the impact on the solar industry?

Today we look at the impact of this move in three ways.

Twitter Background Introduction:

In the solar industry, in September 2018, the Trump government levied a 10% tariff on Chinese inverters and other projects, including aluminium frames, backplanes and wiring boxes, through the 301 clause procedure.The plan was originally scheduled to raise these tariffs to 25% on January 1, but the Trump administration delayed the implementation of a 25% tax rate as a bargaining chip in trade negotiations.Now, President Trump has said that progress is too slow and has announced that tariffs will be increased to 25% on Friday, May 10.

Several larger inverters may be affected.For example, Enphase, Sungroup and Huawei.

It has been reported that part of Enphase's Chinese production capacity has been transferred to another Flex factory in Mexico for production.Sungroup has laid out 3GW manufacturing capacity in India before 301 has been proposed.

Inverter manufacturers that have shifted their capacity abroad may not be affected by export tariffs from the United States, but capacity release and when the plant reaches full capacity are also important factors affecting revenue.

Unlike Enphase and Sungroup, Huawei's main manufacturing base is at home, and tax increases may have an impact on Huawei's export capacity to the United States.

Speaking of Huawei, it is reminiscent of the boycott of Huawei Inverter by American experts some time ago. Huawei's American journey is facing many challenges. ) In addition, there are other inverters enterprises in China, such as TEV, Shangneng Electric, Goodway, Jinlang, etc. Some analysts believe that, considering the severity of tariffs, some inverters manufacturing enterprises may also transfer some of their production capacity abroad.

As far as the impact of the inverters tax increase on the US market is concerned, analysts believe that Enphase and Solar Edge, which focus on the US housing market, SMA and LG, which focus on industrial and commercial distributed projects and large-scale ground power plant projects, have little impact on the inverters tax fluctuation and therefore are unlikely to have a significant impact on the US market.

For some projects using Chinese inverters, the cost of inverters in the overall photovoltaic project is relatively small, and the price of Chinese inverters is much lower than that of other countries, so the impact on the project is not great.

In terms of components, the U.S. taxation cycle for Chinese batteries and components is not over yet. Chinese component manufacturers mostly avoid taxes by transferring manufacturing bases abroad. Taxing components necessary for assemblies such as junction boxes, aluminium frames and backboards may increase the cost of component manufacturing in the United States for the U.S. market. The Trump government said it would levy tariffs on Chinese imported components through Bill 201 to support the development of domestic component manufacturing.

In fact, through the above analysis, we can generally see that the overall impact of raising tax rates on the entire solar industry is not great. But Trump's tweet also indicated that tariffs would be imposed on Chinese products valued at $325 million. If lithium-ion batteries are included, this could hit the energy storage market, as most of the world's lithium-ion batteries are produced in China.

From: SOLARZOOM Optical Storage Millions

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