A Tale of Two Solar Technologies

This report is the third in a series from JFI’s Financing the Energy Transition initiative, pairing market analysis with levelized-cost-of-energy modeling to evaluate how trade and industrial policy are interacting with market forces to shape the transition to a low-carbon economy. This memo focuses on the impact of tariffs on solar technology in the US.

The existing literature suggests that the increased domestic costs incurred by tariff policy introduces price distortions that, given the structure of the domestic solar industry, hamper more rapid adoption and result in substantial environmental externalities … Protective tariffs enacted to insulate domestic manufacturers from market forces will inevitably come at a cost to downstream solar developers, installers, and consumers in the short term while capacity continues to scale up and the domestic industry structure adjusts.