A Study in the Contortions of Industrial Policy

U.S. Secretary of Commerce Gina Raimondo at Tallinn Digital Summit. September 7, 2021. Photo courtesy of U.S. Embassy, Tallinn, Estonia.

Last week the Commerce Department made the decision to slap tariffs on solar imports from Southeast Asia. The tariffs will raise the costs of U.S. solar-energy projects that the Biden White House claims to be the vital future of U.S. energy.

After a 17-month investigation, reports the WSJ, “Commerce concluded that five Chinese solar manufacturers were circumventing U.S. anti-dumping tariffs by doing minor assembly of solar components in Vietnam, Thailand and Cambodia for export.”

The biggest Losers? The American Taxpayer

The costs for U.S. solar-power developers will rise with the new tariffs, which will run as high as 254%.

The “solar follies” reveal the contradictions of the Biden Administration’s industrial policy. Its labor, climate and anti-China agendas conflict in their combination of subsidies, mandates, bans and taxes.

Subsidies lead to tariffs, which lead to more subsidies as government becomes the allocator of capital and decides which companies win or lose.

According to the Solar Energy Industries Association, “The U.S. Department of Commerce is out of step with the administration’s clean energy goals.”  The SEI Association fundamentally disagrees with Commerce’s decision.

It will take at least three to five years to ramp up domestic solar manufacturing capacity and the global supply chain will be vital in the short-term.”

The WSJ refers to what’s going on as the “Solar Follies,’ which reveals the contradictions of the Biden Administration’s industrial policy.

Its labor, climate, and anti-China agendas conflict in their combination of subsidies, mandates, bans and taxes.

What’s New Here?

Subsidies lead to tariffs, which lead to more subsidies as government becomes the allocator of capital and decides which companies win or lose. The biggest losers, as usual, will be American taxpayers.