This week, the Commerce Department imposed modest tariffs on Chinese solar panels due to their unfair state subsidies. The tariffs range from 2.9% to 4.73%. Trade wars usually do start out small but have a nasty habit of escalating. Additional tariffs may be coming in May after a ruling on Chinese dumping of solar panels.

The Chinese government responded mildly but did warn that a continued tougher stance from the US could hurt relations between the two countries, especially since the US is already targeting other Chinese imports like rare earths.

The US has a well-deserved reputation for playing hardball in business and for supporting companies, including renewable energy firms, with subsidies and cheap loans. Green Chip Stocks opines that “useless” bureaucrats and entrenched special interests have hindered development of renewable energy here with the result that the Chinese have simply zipped ahead of us, both in solar panel production and in manufacturing wind turbines.  Others have noted that Chinese solar panel companies are happy to sell small orders and have superb customer service while US solar panel companies are focused on big orders and have lackadaisical service. Which company would you buy from?

And really, aren't cheap solar panels a good thing? Ferocious competition and breakthrough innovation has dropped the price of solar panels sharply. This has created tens of thousands of jobs in the US for solar installers as well as in companies that sell raw materials to Chinese companies. All of these jobs could be threatened should a serious trade war start.

California has mandated 33% renewable energy by 2020. Much of that will be done by solar power. A trade war will make solar panel prices to go up again and that’s exactly what California doesn’t need. Uncertainty in prices will have undesirable consequences in planning and building solar farms. Projects could be canceled or delayed, and that means California could miss its 33% renewables target. Let’s hope we don’t have a trade war.