Solar stocks are in focus for investors as President Joe Biden announced the U.S. will waive tariffs aimed at solar panel manufacturers in Southeast Asia. This news had a far-reaching affect and is the tide that’s lifted most boats in this sector today.
Indeed, tariffs have been a huge thorn in the side of foreign manufacturers and domestic companies alike, as U.S. end consumers are forced to pay higher prices for goods. Given how tight supply chains are right now, this move is expected to ease prices in the sector. For those concerned about inflation, that’s a good thing.
Solar stocks including Sunrun (NASDAQ:RUN), Array Technologies (NASDAQ:ARRY), Enphase (NASDAQ:ENPH), SunPower (NASDAQ:SPWR) and the Invesco Solar ETF (NYSEARCA:TAN) were up considerably on the news.
Let’s dive into what investors should make of this development.
Solar Stocks Soar on Tariff Removal
Fewer tariffs mean potentially higher margins for producers and lower costs for consumers. Most macroeconomists would take this news positively, especially given the energy pressures facing the world right now.
Many environmentalists and environmentally-conscious investors point to the need for a more rapid transition to renewable energy. However, the costs associated with transitioning to green power have continued to deter necessary investments from companies and individuals. The move to push aside tariffs could provide a boon to this sector and accelerate this transition.
Of course, these tariffs were put in place as part of an initiative to spur U.S. leadership on the manufacturing side of solar panels and other technologies. While companies will likely continue to be incentivized to pursue these goals, in the meantime, this should encourage greater domestic adoption of solar energy.
In March, the Department of Commerce launched a probe into select solar products coming from key countries in Southeast Asia. The goal of this probe was to determine if anti-dumping tariffs against China were being bypassed. Today, it appears a two-year tariff exemption will push this issue aside for another day.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.