Page 10 - North American Clean Energy July/August 2019 Issue

solar energy
Will China-U.S. Tensions
Throw Shade on Solar?
by Nicki Zvik
On September 30th, 2018, the United States, Canadian, and Mexican governments announced that a new trade agreement, titled the “United States-Mexico-Canada Agreement” (USMCA) was passed, poised to replace the North American Free Trade Agreement (NAFTA) that had been in e ect since 1994.
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Originally proposed by the Reagan Administration in 1980, during Reagan’s Presidential campaign, NAFTA was brought into discussion as an e ort to promote fair and free trade, with the intention to bene t all countries involved. Negotiations for NAFTA began in 1986, eight years before Reagan’s successor, President George H.W. Bush, o cially signed o on the agreement. While there was some controversy surrounding NAFTA, the agreement had been widely praised by many world leaders. However, the current administration discovered a distinct loophole that tarnished NAFTA’s original purpose; while NAFTA placed hefty tari s on Chinese imports, it didn’t take long before companies began using other countries as middlemen. is allowed U.S. companies to send manufacturing to China in order to cut costs, but - rather than import goods directly to the United States - China would import products to countries with
low tari s (like Mexico) and then import from those countries to the U.S.
e controversial USMCA is considered a direct reaction by the Trump Administration to further limit China’s involvement in the United States marketplace, by closing the loophole and increasing the tari s
to undesirable rates. e agreement places heavy emphasis on many technology sectors of the market, with a clear focus on the solar industry.
e USMCA places a 30 percent tari on all solar imports, which will eventually taper o to a steady
15 percent within the next few years. e goal of the USMCA, as noted by the Trump Administration, is to boost the American economy, leverage the American job market, and, as the president stated, “deliver for American workers like they have not had delivered to for a long time.” Since the 30 percent tari s were put into e ect, the solar industry has been facing integral changes; many companies that previously found it nancially advantageous to manufacture solar parts in China have had to rethink their business models, and work on bringing manufacturing to the United States.
Today, the USMCA is in full force, but the trade war shows no sign of slowing down. China recently retaliated against the agreement, announcing a plan to place tari s on $110 billion worth of American