Impact on American solar panels manufacturers
Chinese solar panels have dominated the market in the current American economy and are available in almost every part threatening American Solar Panel producers. These overseas products provide more choices to consumers since they are cheaper as compared to American solar panels. However, the solar panels are not the same standards as American-produced panels; thus, it looks like the Chinese are dumping their products on the American market.
The Chinese penetration into the American solar panels market has increased rapidly, in that the American panels have lost a more significant part of the market. Importantly, this increase is at the expense of the local production of solar panels in America. Conversely, Chinese solar panels have led to increased unemployment and reduced productivity in American countries. There is enough evidence to prove that Chinese Solar panels have contributed to lower producer price inflation in America, which moderated an increase in consumer prices, thus helping to curtail the production cost.
American manufacturers’ common perception is that the increased Chinese solar panels have been negative to them, thus demanding increased protection from imported solar panels from China. Although there is a free trade clause between China and the United States, the same has faced stiff opposition from business associations and politicians in America. The current American government position is that the free trade agreement between the two countries is not in the country’s interest. Chinese solar panels’ penetration into the US market has not added any significant industrial growth; instead, it has killed American industries.
Impact on American consumers
Early on, imported solar panels from China were cheaper than those produced in America for various reasons, including the lower cost of production in China. Although the reduced price of solar panels in America may have worked in favor of some households, the government is now introducing ways to reduce Chinese solar panels in the US market because of their quality and other factors. As much as international trade has increased the variety of goods American consumers access, the same has come with a heavy price. The American government is highly critical of free trade agreements and thinks that is why the country is looking for ways to protect producers and consumers.
The fact that home customers pay import taxes rather than being imposed directly on the exports of a foreign country should not be overlooked. If businesses rely on imported components or other inputs in their manufacturing process, consumers will be on the hook for the increased cost. Commodities produced in other countries are frequently less expensive than those made in the United States (Robertson,2019). As a result of lower capital and labor expenses, local products are more affordable than imported products; yet, if those costs rise, customers will opt for domestic products comparable to imported products. Tariffs, which are applied on a national level, are usually criticized as being detrimental to consumers.
Final Recommendation
The American government can take the following steps to protect its consumers and organization. The first is to import Quotas for solar panels from China. A product import quota establishes a limit on the amount of a specific item imported into the country. This difficulty is frequently mentioned in connection with the issuance of permits. For example, a government may establish import limits on solar panels to control the same supply.
Ideally, the government can mandate that a particular percentage of solar panels be manufactured in the United States rather than setting importation quotas on a variety of items. As a restriction, a portion of the value of the good itself or a percentage of the value of the good’s worth may be applied. An import limitation on solar panels, for example, could require that 30 percent of the components needed to construct the panels be manufactured in the United States. Conversely, 20 percent of the product’s value is derived from components manufactured in the United States.
Furthermore, the government can offer licenses to specific organizations. A permit is a government-issued permit that grants an organization permission to import a particular type of product into the country(Fuchus,2019). The sale of imported solar panels, for example, may be prohibited, and licenses to act as importers may only be granted to specified organizations, according to the regulations. Because of this, consumers’ options are limited, and prices are raised as a result.
Conclusion
According to the findings presented, Chinese rivalry has had a substantial impact on American solar panels. Chinese import penetration in the American market has increased significantly over the last decade, with most of this growth attributed to the country. While it has been established that growing Chinese imports have partially replaced imported goods from other nations, the majority of the rise in Chinese market penetration has been at the expense of domestic production (Rosyadi & Widodo,2018). America’s manufacturing exports to China are restricted and do not significantly contribute to the country’s industrial growth. Therefore, something needs to be done to improve the situation and ensure America’s solar panels have a market too.
Works Cited
Fuchs, R., Alexander, P., Brown, C., Cossar, F., Henry, R. C., & Rounsevell, M. (2019). Why the US-China trade war spells disaster for the Amazon.
Robertson, R. (2019). How US Imports from China Affect Mexican Labor Markets.
Rosyadi, S. A., & Widodo, T. (2018). Donald Trump’s tariff increase against Chinese imports on the global economy: Global Trade Analysis Project (GTAP) model. Journal of Chinese Economic and Business Studies, 16(2), 125-145.