I am concerned that the escalating trade war with China will kill the solar industry in the US. Without getting in to the politics of the situation (please!) and simply looking at the tariffs at face value, will the tariffs on Chinese imports raise the prices on solar modules to US solar companies so much that it will render PV projects in this country economically nonviable?
Sorry did not read any of the thread. Will read it later.
Tariffs are not the major factor in the equation. Fit the larger structure into a model or paradigm and then see how it looks.
Base case: excess or surplus of productive capacity. Chine excels at this. This is the norm for this era.
Premise.: China needs factory jobs to keep its population busy (if not contented). The alternative, which would happen in deflation, is closing of the excess productive capacity (factories), unemployment, and idled population given incentive to (internal China) regime change. (not politics, economics)
China needs exports to keep the population busy, occupied. They cannot idle them all nor will they.
The other thing China needs is to stimulate their internal domestic demand (by Yuan printing and you will see this ). but even the money printing will fall short of keeping them all busy and China will have the option of printing Yuan to subsidize exports, probably what the Japanese have been doing forever.
China has the problem of needing to keep its population busy working, which it cannot do fully with its own internal domestic demand. China needs exports more than we need the imports, and (competitive) Yuan devaluation is on the table. Even if the money printing goes to pay the tariff (very likely result).
Consumers should have no fear of paying the tariff themselves. Demand will be hit, much less, resulting in lower liquidating prices for those consumers still standing (lower rates coming too).
This wave is deflationary. Tariffs are not the cause or effect in this.
There is an alternate scenario which is historically proven true. In times of deflation when surplus of productive capacity is too much, war is used to (relieve) the negative aspects of having too much (stuff). In theory the other guy's productive capacity would be burned down leaving yours still standing and working. In practice, the wartime deficit spending is just another stimulus of internal domestic demand (for both sides). Risk or time for war is high in deflationary times. Money printing is the cure in either scenario. Until the balance between demand and productive capacity is restored.
