Trump tariffs on Mexico could hit SunPower, Enphase

There appears to be no reprieve from the erratic and punitive international policy of the Trump Administration, where tariffs are used as a political tool against both enemies of the United States – real and perceived – as well as the nation’s closest allies.

As the latest, last Thursday U.S. President Donald Trump stated that the United States will impose a 5% tariffs on goods imported from Mexico, until such time as that nation stops the flow of migrants crossing its border.

On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..

— Donald J. Trump (@realDonaldTrump) May 30, 2019

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pv magazine was not able to find an actual announcement from the White House by press time.

The reaction from the solar industry appeared to be one of bitter resignation. “Another week, another trade crisis,” observed NEXTracker Founder and CEO Daniel Shugar on LinkedIn.

The great global supply chain shift

But some manufacturers will not be able to write this off so easily. Among the manufacturers who could be affected by any tariffs are Enphase and SunPower, the former of which has shifted manufacturing to Mexico specifically to avoid Section 301 tariffs on inverters from China.

For Enphase, tariffs on China and now the threat of tariffs on Mexico come as the company has fought hard to return to profitability. And while 5% tariffs are better than the 10% and then later 25% that it has suffered on its Chinese-made microinverters, this is still not welcome news for a company whose very survival has been dependent on lowering the price of its products.

Another company that will inevitably be affected by any tariffs on Mexico is SunPower, which told Bloomberg that it is currently looking at the implications on modules which it assembles in Mexico and ships to the United States.

SunPower has gotten luckier at dodging tariffs compared to Enphase, and received one of the rare exemptions to the global Section 201 tariffs for its back-contact solar products, likely as a quid-pro-quo for its purchase of the former SolarWorld factory in Oregon. SunPower is now selling that factory, but plans to lease a portion of the space and continue to make its P-Series modules there.

Another company which could be affected by any tariffs on Mexico is NEXTracker, which is owned by Flex – the same contract manufacturer that makes Enphase microinverters and has made SunPower modules.

However, Flex is a global company, and NEXTracker has advertised this fact in noting that this makes it more resilient in the face of tariffs.

“If you are involved in utility scale solar in the US, you should be looking very seriously at the size, sophistication, and scale of your equipment providers supply chain to navigate this volatile period,” noted NEXTracker CEO Shugar. “NEXTracker is manufacturing trackers on 5 continents and is your proven partner.”