Research by Tuck’s Bryan Bollinger finds that U.S. tariffs on imported solar panels raised prices, slowed solar adoption, and ultimately reduced overall economic welfare.
In 2011, the U.S. solar industry was in dire straits.
Prices of solar panels had dropped precipitously, and dozens of manufacturers had either declared bankruptcy or were on the verge of doing so. In October of that year, SolarWorld Industries America and the Coalition for American Solar Manufacturing filed petitions with the International Trade Commission (ITC) and the U.S. Department of Commerce (DOC), alleging that Chinese solar panel makers were dumping products onto the market at below-market prices and receiving unfair subsidies from the Chinese government. In successive decisions a few months later, both the ITC and the DOC confirmed the allegations in the petition, finding that Chinese solar producers were selling panels in the U.S. market for prices that were between 35 percent and 250 percent less than fair market value.
The U.S. government had a range of options at its disposal to protect domestic solar firms, although it has a statutory obligation to respond to such complaints. Perhaps due to politics, or expediency, or some combination of the two, it began a tariff frenzy. The U.S. imposed four rounds of tariffs that applied to solar imports between 2012 and 2019, first targeting China, then Taiwan, and then the rest of the global exporters. The fourth round of tariffs, unlike the first three, did not specifically focus on solar cells and panels, but included them under an umbrella of exports receiving an additional 25 percent tariff on imports from China.
So what did all these solar tariffs accomplish? Mainly, they increased prices for American consumers, thereby slowing solar adoption, reducing jobs for solar installers, and hurting the environment. That’s the conclusion reached by Bryan Bollinger D’03 Th’03, Professor of Marketing and Economic Policy at Tuck, in a working paper he wrote with co-authors from Yale (Kenneth Gillingham D’02), Cornell, and Duke.
Bryan Bollinger D’03, Th’03, professor of marketing and economic policy, teaches Customer Analytics and Sustainability and Marketing in the Tuck MBA program. His research explores causal inference, energy and environment, digital marketing and advertising, pricing, and industrial organization. | Photo by Laura DeCapua Photography
In “Strategic Avoidance and the Welfare Impacts of U.S. Solar Panel Tariffs,” the co-authors make their case in three steps. First, they compile unique data on solar shipments and production at the individual firm level over the last decade. They find that Chinese manufacturers responded to the initial tariffs by quadrupling the number of solar panels they produced offshore, mostly in Southeast Asian countries that weren’t subject to the levies. Prices in the U.S. increased by over 20 percent relative to other markets as a result.
The second step involves two parts. First, the authors estimate a model of downstream consumer demand. Using production and shipment data, they then estimate a model of manufacturer sourcing decisions, which depend on the firm-level tariff rates. This allows them to assess the relative efficiency of production in each location. Taken together, the model and underlying data variation allowed the researchers to calculate tariff pass-through rates. They find that, in response to offshoring, Chinese manufacturers’ costs increased, a large portion of that increase was passed on to U.S. consumers in the form of higher prices for solar panels, and as a result, demand decreased.
In step three, the researchers use the model estimates to conduct counterfactual analyses in order to examine the effects of the tariffs on welfare and employment. Their analysis concludes that the tariffs decreased consumer welfare to the tune of $6.9 billion, prior to accounting for any environmental considerations. The results show that the tariffs benefited domestic suppliers, and padded the government’s coffers, but the net effect was to harm both domestic and global welfare. Regarding employment, the effects again were mixed, but ultimately negative in net. Although domestic solar manufacturing jobs increased, the tariffs decreased downstream solar installation employment more. They write: “This is because manufacturing labor demand only depends on the number of solar panels that are produced domestically, whereas installation labor demand depends on the total number of solar panels demanded, both domestically and from abroad.”
The solar tariffs myopically focused on protecting domestic solar firms, ‘But you have all these other components of welfare; all these other links in the chain that lose out.’
— Bryan Bollinger D’03, Th’03, Professor of Marketing and Economic Policy
With the benefit of hindsight, it’s worth asking if there might have been a better option than the solar tariffs. It’s a question the researchers address at the end of their paper, via a counterfactual model that analyzes industrial policy—such as a manufacturing subsidy—as a substitute for trade policy. As they were writing the paper, the Inflation Reduction Act (IRA) had just been passed, and it contained precisely the sort of industrial policies they had in mind. For example, the IRA contained a 30 percent tax credit for residential, commercial and utility scale solar projects, a production tax credit, and domestic manufacturing and investment incentives, among other provisions. With an analysis modeled after the manufacturing production tax credit within the IRA, the researchers find that a domestic manufacturing subsidy would improve welfare more than the current tariff policy, and more than doing nothing. Even better would be a subsidy for global manufacturing, as it would have larger domestic and global welfare benefits through sharper reductions in local and global air pollution.
Perhaps the largest takeaway from Bollinger’s research is that the solar industry is a complicated, multidimensional market, with not just manufacturers and buyers, but also intermediaries such as installers, not to mention the largest stakeholder of all: the global atmosphere. Helping one stakeholder can hurt the others. The solar tariffs myopically focused on protecting domestic solar firms, “But you have all these other components of welfare,” Bollinger says, “all these other links in the chain that lose out.”
This story originally appeared in print in the Winter 2026 issue of Tuck Today magazine.
Tuck professor Emily Blanchard on the economic, political, and human impact of escalating trade policies.
Tuck professor Tami Kim works at the intersection of marketing, law, and politics to improve the customer experience.
tuck.communications@tuck.dartmouth.edu
eric.h.walters@tuck.dartmouth.edu
Tuck News features the latest stories about business research conducted by faculty members and business practitioners at the Tuck School of Business at Dartmouth College. Editorials penned by professors are published on the site, as well as regular school updates from Tuck staff writers regarding trends in business education.
100 Tuck Hall
Hanover, NH 03755
USA
©, The Trustees of Dartmouth College. All rights reserved. | Privacy
