Summary:

The 25% tariffs the Trump Administration imposed on Chinese imports would include inverters and AC modules, which could lead to higher prices for solar installations.

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Main Article:

President Trump's decision to raise tariffs on $200 billion worth of imports from China from 10 percent to 25 percent would increase prices of goods from Asia and reduce economic growth, analysts say.

According to the Tax Foundation model, the tariffs planned and imposed so far by the Trump administration would reduce long-run GDP by 0.21 percent ($52 billion) and wages by 0.13 percent and eliminate 161,751 full-time equivalent jobs. 

And these tariffs include inverters, AC modules, and non-lithium-ion batteries (those made of manganese dioxide, mercuric oxide, lead acid, nickel cadmium or nickel iron), which could mean higher prices for solar installations.

Some Chinese inverter manufacturers had been preparing for these tariffs. Sungrow preemptively took over a facility in Bangalore, India, with 3 GW of annual production capacity in case a trade war began. A spokesperson said it would move 100% of U.S. inverter production to that plant if the tariffs increased to 25%.

Similarly, microinverter manufacturer Enphase announced in September 2018 it expanded its contract with multinational technological manufacturer Flex in Mexico as part of a mitigation plan for the tariffs. It planned to move production of microinverters for the U.S. market to Flex starting this quarter

Tariffs on solar energy products have been a hot-button issue for some time now, with governments from the European Union to the U.S. to China either implementing them or threatening to at one point or another. This week, President Trump said he would impose further tariffs on Chinese solar imports, which sent shares of JinkoSolar (NYSE:JKS) and Canadian Solar (NASDAQ:CSIQ) lower. As two of the largest solar manufacturers in China, the theory is that they both have a lot to lose if higher U.S. tariffs make their products less competitive here. 

However, shares of First Solar (NASDAQ:FSLR) and SunPower (NASDAQ:SPWR), which are the largest solar manufacturers in the U.S., didn't take much of a jump after Trump made his threat.

It used to be that China was the major manufacturing power in the solar industry, but that's no longer the case. After the U.S. imposed anti-dumping tariffs on China's solar exports in 2012,manufacturers responded by moving operations to other countries with low labor costs, such as Malaysia, The Philippines, Vietnam, and Mexico. 

Companies in the industry have also exploited loopholes in the trade rules by moving solar panels through other countries, or finishing their production outside of China. So even if President Trump increases the tariffs on solar panels coming from China, manufacturers may be able to find some ways around them.