trade war 2015.pdf

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Chinese solar manufacturing firms have been able to reduce price of solar PVs to a level which cannot be
matched by manufacturers in USA and other places including Germany. However, this is beneficial to the
growth of solar power throughout rest of the world. US firms who provide solar installation services
(fitting, financing, etc.) are also beneficiaries of such reduction in price. A coalition of US solar
manufacturers have alleged that low price of Chinese manufacturers is artificially created by illegal
subsidies and high dumping margins. US Department of Commerce, responding to this allegation,
imposed high tariffs on Chinese solar panels imports. However, this is not good news for solar energy
expansion in United States as end users pay higher rates than most other places of the world. In this
paper we try to examine the impact of the tariffs and if other policies can effectively protect US interests
without raising solar power cost. We show that tariff barriers are unsustainable and US firms can hold
technological upper hand by following the cooperative structure of global semiconductor industry’s
fabless-foundry model.