The reactions to the Commerce Department’s slapping of a 31 percent import tariff on major Chinese solar panel manufacturers ranged from Li Junfeung, a Chinese regulator, who called the decision “dangerous” and promised that Chinese companies would retaliate by calling for tariffs on polysilicon which comes from the U.S., to my colleague Ucilia Wang who argues that tariffs will have minimal impact on the ultimate solar market in the U.S., with the tariffs’ additional costs absorbed by the supply chain. The truth is somewhere in between with solar panel pricing rising pretty modestly in cost. The reality is that the solar cell and even cheap Chinese labor, are actually not that large a part of the input costs that go into producing a solar panel. What has given China such an advantage isn’t cheap labor, but massive credit and factories that can produce at scale. On the other side, China could take small retaliatory actions but it’s also not in their interest to spark a solar trade war. The U.S. market is a major solar market for Chinese makers and with consolidation and tough times ahead for the Chinese solar industry, it won’t want to increase raw material (polysilicon) costs either.