Strategic Avoidance and the Welfare Impacts of U.S. Solar Panel Tariffs

Todd Gerarden, Bryan Bollinger, Kenneth Gillingham and Daniel Yi Xu

No 20848, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This study examines the effects of tariffs imposed by the U.S. on imported solar panels. We first provide clear evidence that tariff-exposed rms shifted production to locations that did not face tariffs, and that domestic prices increased relative to other markets. We then develop a structural model to analyze welfare effects. We find that the tariffs generated modest gains for domestic manufacturers and for government revenues, but larger losses in domestic consumer surplus and environmental benefits, thereby reducing domestic welfare. Furthermore, the tariffs reduced domestic solar industry employment and wages. By contrast, subsidizing solar panel manufacturing could increase domestic production, employment, and welfare.

Keywords: Tariffs (search for similar items in EconPapers)
JEL-codes: F14 (search for similar items in EconPapers)
Date: 2025-11
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