While the damage is largely already done for cells, modules and inverters, the increased tariffs on U.S. module components and 15% tariffs on lithium-ion batteries are not good news for either sector.

On 23th Aug, the U.S. Trade Representative (USTR) announced its latest increase in a wide range of tariffs imposed on Chinese goods, including an increase from 25% to 30% on $250 billion worth of Chinese imports effective October 1. This means the first three tranches of Section 301 tariffs – including the September 2018 round which started at 10% and increased to 25%.

These three tranches cover PV cells, modules and inverters, but are unlikely to have a major impact on imports of these goods. U.S. imports of Chinese cells and modules are limited due to the combination of anti-dumping, anti subsidy (countervailing duty or CVD), Section 201 and these new Section 301 tariffs, all of which are additive and which add up to a hefty price tag.

As for inverters, the damage has already been done and supply chains have shifted. Sungrow has a 1 GW factory in India with which it supplies U.S. customers, Enphase is making products in Mexico through its manufacturing partner Flex, and Huawei has pulled out of the U.S. market.

Ironically, U.S. module manufacturing may be hit more than these other sectors, as Section 301 duties also apply to components including aluminum frames and backsheets which are commonly imported from China for U.S. module assembly.

USTR is also raising tariffs from 10% to 15% on the latest round of Section 301, set to take effect on September 1, and these include lithium-ion batteries. This could have a much more significant impact; 2/3 of the world’s lithium-ion battery manufacturing is in China, and Tesla’s factory in Nevada is the only gigawatt-scale battery factory in the United States.

As such, there is likely to be intensified demand for lithium-ion batteries from Korea, Japan and Poland, which are the nations with the largest manufacturing capacity after the China and the United States.