POLITICO Nightly: Sunset for free trade

BY GAVIN BADE Presented by Citi A worker installing solar panels atop a facility at the Port of Los Angeles. | Mario Tama/Getty Images SUN BLOCK — The free trade era for clean energy technology in the U.S. came to an end this week. On Thursday, the Biden administration’s two-year pause on tariffs for solar energy technology from four Southeast Asian nations expired. Now, those products will be subject to higher tariffs — along with Chinese solar panels, batteries and other clean energy components that the Biden administration hiked duties on last month.  The implications are bigger than you think. The solar tariff moratorium was one of the last vestiges of free trade that once defined the clean energy industry. Now, virtually all the major clean energy technologies — from the steel for wind turbines to electric vehicles and the batteries inside them — are now subject to at least some significant tariffs meant to protect the U.S. manufacturers, especially from China. That’s a dramatic change from the clean energy policies of the last Democratic administration, when President Barack Obama’s team allowed solar manufacturing to head to China, reasoning that lower prices for panels would jump-start clean energy deployment in the U.S. If anything, that plan worked too well. Prices for solar panels fell precipitously over the last decade and a half, making the renewable technology cheaper than existing coal-fired plants and competitive with modern gas turbines. That prompted a massive buildout of solar energy in the U.S., but also meant that domestic solar manufacturing almost went extinct. That situation presented Biden with a choice — either prioritize climate action with cheap imported panels, or prioritize domestic manufacturing by instituting tariffs. The two-year moratorium was his attempt at a compromise. At the time, domestic manufacturers argued that Chinese companies were avoiding existing tariffs by shipping their panels through Southeast Asian nations. Though the administration agreed that trans-shipment was occurring, the White House delayed the imposition of additional tariffs to give companies installing solar projects — which opposed the tariff petition — time to stock up on panels and allow domestic manufacturing to expand. And stock up they did. Solar installers have such a glut of panels right now that they are rushing to deploy them, since any that aren’t used within 180 days of the tariff snapback will then have duties slapped on them as well. That’s driving a boom in solar projects this year, Reuters reported this week , with installations up 135 percent in the first quarter of 2024. That dynamic has annoyed domestic manufacturers, who are concerned that the stockpile will mean less demand for their own factories, which also expanded during the moratorium. An industry report this week found that domestic manufacturing of solar modules increased from 15.5 gigawatts in late 2023 to more than 26 gigawatts today — enough to supply about 70 percent of domestic demand, if the pricing is right. In the meantime, some domestic manufacturers are pushing for even more tariffs. Today, the U.S. International Trade Commission gave the green light for a new tariff investigation into Southeast Asian solar products — again, responding to U.S.-based manufacturers who say Chinese firms are moving to those countries to avoid tariffs. Given that the ITC has already found that trans-shipment is occurring, it’s likely that at least some new tariffs will come out of the new investigation as well. That will please protectionist lawmakers on both sides of the aisle, who this week wrote to Biden asking for more tariffs on imported panels and parts. But there’s electoral peril in solar protectionism as well. While higher tariffs may play well in Midwestern industrial swing states like Pennsylvania and Wisconsin, they could hurt Biden in the Sun Belt states like Nevada and Arizona, where solar installers support thousands of jobs. All four are among the small universe of battleground states that will determine the presidency in November, but so far midwestern lawmakers have had better luck pushing their industrial agenda with the president.   “We can’t put ourselves in a situation that results in projects being shut down because they don’t have access to [solar panel] parts,” Arizona Sen. Mark Kelly (D) cautioned last month, when the new tariff petition was filed. Companies that install solar panels – which, unlike the manufacturers, like cheap imported panels – have promised to fight the imposition of new tariffs, saying that the probe “will lead to further market volatility” in an already fragile industry. But they’ve all but given up on the original two-year moratorium, with the trade group representing installers admitting this week that it did not lobby for an extension. It’s just another indication that protectionism in the energy sector is going strong. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight’s author at gbade@politico.com or on X (formerly known as Twitter) at @GavinBade . A message from Citi: Over one-third of suppliers reported focusing on nearshoring in 2023. With global flows and geopolitics continuing to change, supply chain resilience has proven to be critical – and as a result, nearshoring is gaining further momentum. Many companies are executing nearshoring strategies to diversify their supply chains, reduce risks associated with distant manufacturing hubs, and move production closer to their end-consumers. Learn more in the Citi GPS Report, The Future of Global Supply Chain Financing.   WHAT'D I MISS? — Prosecutors rest their case in Hunter Biden’s trial on gun charges: Federal prosecutors rested their case at Hunter Biden’s trial today after calling a slew of witnesses who told jurors about his descent into crack cocaine addiction and his purchase of a handgun in 2018. Biden’s attorneys are expected to put on a brief defense case that will likely wrap up early next week. The president’s son has not yet indicated if he’ll testify in his own defense. Biden is charged with three felonies stemming from his purchase of a revolver in October 2018. — Biden in Normandy delivers a wake-up call address to Americans: President Joe Biden came to Normandy on Thursday to deliver a warning to the world not to squander the legacy of D-Day. Today, he returned. This time, he was speaking squarely to an audience back home . In a mid-afternoon speech today, Biden hailed the memory of those 225 U.S. Army rangers who scaled the 150-foot cliffs 80 years ago. But the subtext was more political: urging Americans themselves to honor those sacrifices by embracing the principles of democracy and recognizing its fragility. — U.S.-built pier in Gaza is reconnected after repairs, and aid will flow soon, U.S. Central Command says: The U.S. military-built pier designed to carry badly needed aid into Gaza by boat has been reconnected to the beach in the besieged territory after a section broke apart in storms and rough seas, and food and other supplies will begin to flow soon, U.S. Central Command announced today. The section that connects to the beach in Gaza, the causeway, was rebuilt nearly two weeks after heavy storms damaged it and abruptly halted what had already been a troubled delivery route.   THE GOLD STANDARD OF POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. 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Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY .     NIGHTLY ROAD TO 2024 POLITICS AT THE WATER’S EDGE — President Joe Biden’s campaign launched an attack ad against former President Donald Trump from France today, reports POLITICO, placing Trump’s past criticisms of members of the military against the image of the hallowed grounds of Normandy. The minute-long video — which was shared on X after Biden concluded a speech at Pointe du Hoc — went after Trump for reportedly disparaging service members, including calling them “losers” and “suckers.” TALES FROM THE APPRENTICE — As Donald Trump seeks to make inroads with African American voters in his third run for the White House, fresh allegations are surfacing about his disrespectful behavior toward Black people inside the Manhattan skyscraper that launched his show, The Apprentice, and political career. There are still questions about whether any of that behavior was caught on tape, writes the Associated Press. OUTSIDE HELP — Cornel West’s independent presidential campaign is broke. His former campaign manager says he knows nothing about ballot access. And he spent more on graphic design than petition-gathering in his most recent campaign finance report. But tens of thousands of signatures have been gathered on behalf of the famed left-wing academic in key states thanks to self-organized grassroots volunteers — and some help from outside operatives tied to a Republican consulting firm , reports NBC News. TRUMP’S VEEP TIMETABLE — Donald Trump said he would announce his running mate next month at the Republican National Convention, a move that would add considerable suspense to a gathering that otherwise could lack for high drama. Trump has told aides for weeks that he would like to use the convention for the announcement, though he has been more noncommittal in public. Last month, he told TMJ4 News in Milwaukee that there was “a pretty good chance” he would introduce his running mate during the convention, a timetable he seemed to settle on during a pair of interviews on Thursday , reports the New York Times. GOOD METRICS, BAD VIBES — President Joe Biden is running out of the tools — and the time — he needs to turn around Americans’ gloomy view of the U.S. economy , reports POLITICO. Today, the nation got the latest sign that it’s in a sustained economic upswing, adding 272,000 jobs in May. But the surprise show of labor market strength is unlikely to sway a downcast public fixated on rising prices, the cost of housing and high interest rates. And Democrats are starting to outwardly despair that the economic tailwinds they once imagined lifting Biden to reelection aren’t materializing, at least not in the eyes of voters.   A message from Citi:     AROUND THE WORLD Ukrainian President Volodymyr Zelenskyy shakes hands with President Joe Biden as they sit in front of U.S. and Ukrainian flags. | Evan Vucci/AP PARTY FAVORS — On his trip to Western Europe to commemorate D-Day, Ukrainian President Volodymyr Zelenskyy, is already scoring some wins . President Joe Biden announced that he’s signing a new $225 million Ukraine package today, some of which will go to fixing Ukraine’s electric grid. The package also includes artillery ammunition, air defense missiles and anti-tank weapons, Secretary of State Antony Blinken announced today. French President Emmanuel Macron also announced Thursday that Paris will help train 4,500 Ukrainian soldiers and pilots, and give a number of Mirage 2000 fighter jets to the country, Zelenskyy is also meeting with Macron during his visit. Still, some Ukrainian lawmakers and people close to Zelenskyy’s office aren’t confident their allies are ready to provide assistance quickly enough to win the war. That’s even after rallying cries like a speech Biden gave Thursday at the D-Day commemoration, stressing that if Russia prevails, “all of Europe will be threatened.” Some officials in Kyiv aren’t buying the rhetoric: “His D-Day speech doesn’t matter,” said a person who has spoken with officials in Zelenskyy’s office, granted anonymity to speak candidly. Among top Ukrainian officials it’s seen as empty rhetoric, the person explained. MORE ISRAELI LIES!          MORE AIRSTRIKES — Israeli airstrikes in central Gaza overnight killed 18 people, including the mayor of the Nuseirat refugee camp , hospital officials said today. The strikes targeted the Nuseirat and Maghazi refugee camps and the towns of Deir al-Balah and Zawayda, according to The Associated Press. Iyad al-Mughari, mayor of the Nuseirat camp, was killed along with four children and one woman, hospital officials said. The IDF said today it had killed dozens of Hamas fighters in central Gaza, according to Israeli media.   JOIN US ON 6/12 FOR A TALK ON THE AIRLINE INDUSTRY : As air travel soars again, policymakers and airlines are grappling with a series of contemporary challenges to the industry's future. Join POLITICO on June 12 for a topical and timely conversation with government leaders and aviation stakeholders about the state of the airline industry. From what passengers want to what airlines need amid the high demand for air traffic, workers and technology solutions. What can Washington do to ensure passengers and providers are equipped to fly right? REGISTER HERE .     NIGHTLY NUMBER 272,000 The number of jobs that U.S. employers added in May , shattering expectations that nonfarm payrolls would reflect a softening market as other indicators point to a cooler economy. Average hourly earnings also rose by an annual pace of 4.1 percent, surpassing the rate of inflation. RADAR SWEEP JACKED UP — Steroids aren’t just for bodybuilders or baseball players anymore. Through word of mouth from podcasts or just other people at the gym, normal people who aren’t even hoping to perform athletic feats — just look a little better around the edges — are doing steroids more than ever. But according to testimonials that Rosecrans Baldwin collected for an article in GQ, just a little bit of steroids can turn into an addiction and can lead to serious health problems. Read the deep dive into the phenomenon here . PARTING IMAGE On this date in 1995: Donald Trump poses for photos outside the New York Stock Exchange after the listing of his stock. He took his flagship Trump Plaza Casino public, offering 10 million shares of common stock at an estimated price of $14 per share; the company ultimately ended up in bankruptcy. | Kathy Willens/AP Did someone forward this email to you?  Sign up here . A message from Citi: Over one-third of suppliers reported focusing on nearshoring in 2023. With global flows and geopolitics continuing to change, supply chain resilience has proven to be critical. As a result, many companies are finding it more relevant to execute a nearshoring strategy, shifting their manufacturing and production operations closer to their primary markets. Benefits associated with nearshoring include helping to diversify supply chains, bolster resilience, and reduce risks associated with distant manufacturing hubs. Explore this and other supply chain trends in the Citi GPS Report, The Future of Global Supply Chain Financing.     Follow us on Twitter Charlie Mahtesian @PoliticoCharlie Calder McHugh @calder_mchugh   FOLLOW US

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