The International Trade Commission (ITC) is expected this week to decide on a petition from Suniva Inc. and Solar World AG, two foreign-owned and bankrupt solar firms, on whether to grant them import relief by imposing duties on solar cells imported into the United States.

In a new policy brief, R Street Policy Analyst Clark Packard argues that if the ITC and the Trump administration impose new restrictions on imported solar products, it will lead to retaliation from our trading partners, hamper the possibility of a subsidy-free future and potentially devastate a growing market.

Suniva’s filing was made under Section 201 of the Trade Act of 1974, a rarely used but nevertheless powerful statute. Section 201 relief differs markedly from a standard antidumping or countervailing duty case, both of which target “unfair” trade practices and permit the federal government to apply tariffs or other restrictions to imports from one particular country or company. Suniva and SolarWorld seek what is known as a “global safeguard,” which would apply to fairly traded imports from all countries.

“In theory, safeguard relief under Section 201 is designed to provide a safety valve for domestic industries against a sudden surge of imports,” writes Packard. “However, given the extreme remedy they offer, Section 201 cases are rare and the standard to grant relief is higher than for antidumping or countervailing duty cases. If Suniva and SolarWorld’s requested tariffs and price floors are implemented, the price of solar products would roughly double, leaving the United States with the highest-priced solar energy in the world.”

If the ITC finds the petitioners suffered injury as a result of an increase in imports, it will propose remedies to President Donald Trump. The president, in consultation with the Office of the U.S. Trade Representative (USTR), then would have the broad authority to make a final determination on the appropriate remedy.

“Under global trade rules, a country can exempt a product from safeguard import measures from another country with which it has a free-trade agreement,” writes Packard. “If the ITC and the Trump administration insist on restricting imports in this case, they should consider this as an alternative strategy.”