Biden Invokes Defense Production Act To Counteract His Own Protectionism

You don’t see it every day, but you might be surprised at how often a president declares some policies of his own administration to pose a threat to national security.

That’s precisely what Joe Biden did Monday when he used the Defense Production Act for “acceleration domestic production” solar panels and other renewable energy projects. Biden said Monday that “Solar photovoltaic components and modules are vital to our national defense.”

Biden stated that without presidential action, “United States Industry cannot reasonably be expected” to supply the necessary industrial resource, material or critical technology item within a reasonable time frame.

That is to say: The president invoked executive power in an attempt to increase the supply of solar panels in America—and he did it just four months after invoking executive power to decrease the supply of solar panels in America.

Let’s take a look back at February. This was when the Trump administration set aside a string of tariffs that were originally placed on solar panels and their component parts. Biden increased tariffs at a rate exceeding 14 percent over the following four years, rather than let them disappear. That he did despiteThere were numerous warnings made by the solar sector about the damage that tariffs have already caused: an estimated net loss in manufacturing of 6,000 jobs, and an overall loss in employment of 62,000, according the Solar Energy Industries Association trade group.

Biden went ahead regardless. It was a decision that effectively prioritized domestic solar panel production over other aspects of the solar industry—like installation. The tariffs made goods from other countries less expensive to import are beneficial for domestic producers, so they will likely buy fewer. Biden declares that the shortage of solar panels is a national emergency and requires that executive powers be used to wage war.

This makes no sense. If you want a lot of solar panels installed in the United States—something the White House definitely wants, as it has set a goal of having solar energy account for half of all American energy production by 2050—then it shouldn’t matter where those panels come from. A South Korean solar panel can produce green energy just like one manufactured in Georgia. The United States has a shortage of solar panels to keep up with rising demand.

It’s great to be a President who is interested in more American solar energy. You just need to follow these steps: There is nothingLet a mix of domestic and foreign suppliers meet your domestic needs.

That’s why Biden’s decision in February made little sense—unless you were one of the politically powerful but economically unimportant domestic solar panel producers that have been pulling the strings on U.S. solar panel trade policy for the past few years.

Suniva from Georgia, a company based in Georgia, stated to the Trump administration that tariffs on imported solar panels would encourage domestic production and create approximately 114,000 jobs. Five years later, as Biden was mulling an extension to those tariffs, Suniva was once again on the front lines of lobbying for protectionism—despite seemingly having ceased to exist as a company that actually manufactures anything. You can read more about Suniva here. There are reasons As we have previously reported, Suniva went through bankruptcy and closed its Atlanta plant. It has not updated its website in 2017 as a result.

The Trump and Biden administrations worked in tandem to choke much of the sector by prioritizing the production of solar panels, who account for only a fraction of industry jobs, and increasing the costs of installers and buyers.

It is possible to see the real effects. In Hawaii, for example, a solar developer pulled out of two major projects due to uncertainty about supply chains and costs—both factors that tariffs aren’t helping. A company in Indiana that produces electricity has decided to delay plans to replace part of its coal-fired plant with solar.

The use of the Defense Production Act by Biden to address these issues is far from certain. For that matter, it’s not clear how Biden’s use of the Defense Production Act is even appropriate—it’s a law meant to be used during wartime, not a convenient way for a president to centrally plan a sector of the economy (that he’s simultaneously trying to sabotage with a different set of powers). This is also not an instrument that can be used to reverse the negative consequences of policies.

As with most businesses that build things, America’s solar industry needs to have reliable supply chains in order to be able to access goods from anywhere around the globe. It also requires more private investment. The former is more difficult and costly while the latter creates uncertainty which scares off the latter.

Biden should not try to increase domestic production by adding contradictory orders onto the market. He needs to get rid of government.