President Donald Trump set 25% trade tariffs for aluminum and steel imports from most countries on Monday. Steel and aluminum are the primary materials used in fabricating racks and mounts deployed in solar construction. Solar panels are wrapped in aluminum frames, rooftop solar projects use aluminum rails and attachments and ground-mounted arrays are built on steel racking.
In 2018, during his first presidency, Trump imposed import tariffs of 25% for steel and 10% for aluminum. These latest tariffs are an extension of Section 232 steel and aluminum tariffs, which exempted the duty from certain countries, but this iteration notes no countries unaffected by them. Instead, the administration is open to discussing tariff adjustments with countries with which the United States has a “security relationship.” The proclamation refers to the import of aluminum and steel as a “threat to national security.”
At their advent, the Section 232 tariffs caused fluctuations in domestic steel and aluminum pricing, especially for companies using a diversified stock of materials. In turn, this affected the cost of solar installations. Solar racking manufacturers had to adapt to market volatilities to complete projects commissioned before and after the tariff placement.
While the Inflation Reduction Act has increased domestic solar manufacturing since it was enacted in 2021, creating an unprecedented solar racking manufacturing economy in the United States, Trump has frozen disbursement of those subsidies during a 90-day investigation conducted by Russell Vought, the director of Office Management and Budget, and Keith Hennessy, the assistant to the president for economic policy.
Pretty short sighted I think.
As a producer of all America-made solar mounting goods, our supply partners bring most of their raw aluminum from Canada for processing, so the immediate effect is higher costs on our raw goods. Our raw goods cost is only about 30% of our total cost in production; the rest is value-add machine work and labor, so the increase is not “devastating”. But that is also not the worst of it. We also export finished goods to Canada. If Canada reciprocates like in kind on finished goods coming into their country from the US– that would be devastating, because we are now talking about four to six times more dollars. Our exports help the trade deficit many times more than the imports hurt it.
It’s not like there are a slew of bauxite mines in the U.S available to smelt in the U.S. So, it really does nothing intended by US policy– at least in our case. It just annihilates our exports to Canada increasing the trade deficit– the inverse of the intention.