Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Chinese solar manufacturers surged as much as 14% just after 1 p.m. ET after the U.S. set tariffs on Chinese solar modules. You wouldn't normally think that a tariff would be good, but since December there's been an expectation for a tariff. The question was how much it would be.
So what: The U.S. Commerce Department set import duties of 4.73% for Trina Solar (NYSE: TSL ) , 2.9% for Suntech Power (NYSE: STP ) , and 3.59% for all other manufacturers, including Yingli Green Energy (NYSE: YGE ) , which is also popping today.
Investors may be forgetting, though, that this isn't over. This is only part of the allegation brought forth by SolarWorld, and additional tariffs are likely to be added in coming months.
Now what: What effect does this really have? Probably not a lot.
Manufacturers are already making plans to move some manufacturing to countries such as Taiwan and Mexico because of the anticipated tariff. Plus, as costs have fallen, the cost to ship solar products has become more important, so regional manufacturing was a likely transition for larger suppliers.
What it should do is give SunPower (Nasdaq: SPWR ) and First Solar (Nasdaq: FSLR ) a little bit of breathing room in the U.S. market, but investors are looking well beyond that today. Every penny counts in solar, and if Chinese manufacturers have to add an extra $0.03 or $0.04 per watt to account for the tariff or added costs, that means something in solar.
If anything, I would buy the dip in SunPower's shares today because SunPower has the largest market share in the U.S. and should benefit from slightly higher prices from competitors. I just don't see this being a boon for Chinese manufacturers, like the market is predicting today.
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