[Salon] Who REALLY killed the US solar panel industry?

[Salon] Who REALLY killed the US solar panel industry? Sat, May 18, 8:53 PM (9 hours ago) https://x.com/NuryVittachi/status/1791310900387086603 Who REALLY killed the US solar panel industry? The answer will come as a surprise. No, it wasn’t China. The US did the harm itself. The solar industry in America was decimated BECAUSE an earlier incarnation of the US government introduced tariffs against Chinese solar panels. That was from 2012 onwards—more than a decade ago. . . . UNEXPECTED RESULTS The aim was to protect the domestic US solar industry. But the results were not as the administration expected, to say the least. The global market share of the US solar industry plunged from approximately 9% in 2010 down to just 2% today. And did the tariffs hurt the Chinese makers of panels? It may have done in the short term, but they quickly recovered. China's global market share of the industry rose from 59% in 2010 to 78% today. The issue, clearly, wasn’t the sticker price. It was all the other factors. Consumers in the US and around the world wanted dependable, well-designed products, made quickly and delivered efficiently. That’s what manufacturers in competitive industries have to aim to achieve--but not manufacturers in protected sectors. It’s interesting to note that even US experts predicted the result—although they were not listened to. The new tariffs were “a heavy blow to America's solar industry”, Jigar Shah, head of the anti-tariff Coalition for Affordable Solar Energy, said to the Reuters news agency in 2012. . . . . AND THE SUBSIDIES, TOO And all this happened despite enormous efforts spent by the US to revitalize the industry. On top of the tariffs designed to hurt the Chinese competitors, President Barack Obama's “American Recovery and Reinvestment Act” gave billions of dollars to the US solar industry. Most notably, there was a US$535 million loan guarantee to the solar company Solyndra. And of course more recently, in 2022, Joe Biden's “Inflation Reduction Act” did the same thing all over again. It “unleashed a US$16 billion flood of promised investments in solar manufacturing” in the words of Bloomberg. . . . DISABLING THE COMPETITION What exactly is the logic problem? The US government acts as if competition is bad. If a competitor appears, you try to disable them any way you can. But by taking that position, you have already lost the war. That’s because competition is not a bad thing, but the opposite: it’s a good thing. It’s what spurs companies to invest in R&D, innovate with product features, and trim prices for the consumer. By leaping to the use of tariffs, Biden (like Trump and Obama) entrench the lack of competitiveness among US solar panel builders. (Next up: The entrenchment of uncompetitiveness among car makers in the west.) . . . . THE BIGGER ISSUE That’s the business story, but of course there’s a far bigger ethical issue here. Humanity is facing an existential need to transition out of fossil fuels—and the Biden response is to make good, well-made clean energy products more expensive for customers. That doesn’t make a lot of sense. The irony, of course, is that the US, which prides itself on being the capital of capitalism, is making a series of moves against international free trade. And at the same time, the Chinese are benefiting by responding to competitive pressures the way that good capitalists do.