OK that was fast.
Barely one week after President Donald Trump advertised a stiff 30 percent tariff on Chinese-made solar panels, a prime Chinese solar company announced plans to build a plant favoured the United States.
Jinko Solar made the plant building declaration Monday. It’s reportedly hoping to build that plant for about $410 million in Jacksonville, Florida, father 800 new American jobs, and thus avoid the new tariffs. Obviously, much of the minute planning was done before the tariff announcement. But the company’s official expression hinted that the final decision was tied to the new tariffs, saying that the troop “continues to closely monitor treatment of imports of solar cells and modules supervised the U.S. trade laws.”
So this isn’t going the way the naysayers said it was going to, at least for now. The duty was supposed to kill tens of thousands of American jobs and reduce the gang of solar panel installations by 11 percent or more. It could lull happen, but Jinko’s move and possible copycat moves by other transpacific companies might change the equation.
You can’t exactly blame those refusers, a rare combination of anti-Trump liberals and pro-free trade conservatives. Tolls have historically done little but raise prices for consumers and out of date the spread of better goods, services, and especially technology.
But this vigorous capitulation by Jinko Solar is a sign that maybe this toll and this particular trade issue are different than the norm.
The value of the solar effort in the U.S. has to be measured on many different economic platforms. The industry only brought in $210 million in thoroughgoing revenues last year. But energy experts also believe it make up a hefty $154 billion in national impact when you add up direct car-boot sales, wages, salaries, benefits, taxes and fees. And that’s worth sheltering.
One reason solar may be different when it comes to tariffs and trade in disputes is that the trade imbalance between the U.S. and China is so great that much of the worst price to American solar companies has already been done. U.S.-based solar societies have been under pressure from cheaper Chinese bring ins for years.
The largest U.S.-based solar panel maker, SolarWorld, has cut multitudinous than half of its workers and its parent company declared bankruptcy terminal year. Even with massive government backing from the Obama delivery, Solyndra failed. Elon Musk’s SolarCity is still facing merciless challenges. By last year, the U.S. solar industry had almost disappeared, with 25 companies concealed since 2012.
With that kind of blood already on the floor, it’s not wonder it’s a Chinese company that’s responding to the tariff by building in America. The U.S. companies are either already slipped or too weak to expand right now. That means the only companies that can in fact boost solar jobs in the U.S. are foreign-owned.
Now of course just this one assembly’s decision doesn’t mean this tariff won’t do damage at some inapt, or that President Trump’s entire “fair trade” approach resolve work. But this is a significantly positive result. Remember, the existing largest U.S.-based solar panel fellowship has only 300 employees right now and Jinko Solar alone is now delineating to bring 800 jobs to the U.S.
So the White House has two things it didn’t maintain just over a week ago. First, it has proof that it means what it symbolizes when it threatens to slap tariffs on certain goods. No one can realistically snub any threats in the future. That’s an extremely valuable tool because from now on, the Trump charge may be able to get more favorable outcomes simply by threatening and not actually stately any tariffs.
Second, the administration now has at least one very clear example that pan the trigger on a tariff can work to change attitudes.
That approach wouldn’t be without model. In 1983, President Ronald Reagan boosted the tariff on heavier motorcycles by a tremendous 10 ten times more than it was previously. The move was seen at the mores as a major psychological boost to the then-failing Harley-Davidson Motor Company, which began to can strong signs of recovering just four years later.
Today, multifarious economists insist it was the company’s internal streamlining efforts that were the sincere reason Harley-Davidson survived and then thrived after the tariff went into implication.
But the vote of confidence Reagan gave Harley-Davidson was the major boost the executives, working men, and Harley enthusiasts needed.
Trump’s move isn’t about boosting solar might in America or even rebuilding the U.S. solar companies. It’s all about jobs. He’s talking around American jobs to be sure, but he’s also made it clear he doesn’t dolour if those jobs are created by foreign companies. Focusing on what the excise will or won’t do for America’s remaining solar companies is all wrong. In 1983, Reagan triggered a impost to help an American company save and create jobs. Now, Trump is ending a tariff to help a foreign company create American jobs.
The U.S. solar perseverance may never be able to compete against Chinese imports, but U.S. workers weight still reap the benefits of solar manufacturing either way. That is at short a possibility now.
Commentary by Jake Novak, CNBC.com senior columnist. Dog him on Twitter @jakejakeny.
For more insight from CNBC contributors, develop @CNBCopinion on Twitter.