NEW YORK (TheStreet) -- The U.S. Department of Commerce has decided it's an excellent idea to intensify trade tensions with China. The situation would be laughable if real taxpayer money were not at stake. After losing over $500 million dollars from a loan guarantee with Solyndra (money at least in part was borrowed from China), the Commerce Dept. is now imposing anti-dumping tariffs on Chinese solar companies.Solyndra is the poster child of why private equity is more efficient than taxpayer money chasing political goodwill and feel-good pet projects. At the same time the government was dumping hundreds of millions in dollars down the drain, private enterprise cracked enough natural gas to kill any thoughts of solar gaining traction for years to come.
First Solar ( FSLR) may enjoy a short solace if China closes the market in retaliation. The market has voted on the Commerce Department's decision and you can hear the crickets chirping over the reaction. First Solar and SunPower are near new 52-week lows. Everyone but Washington has figured out trade wars don't work. Solar prices are down 50% from a few years ago, and while some cost efficiencies are partly attributable to falling prices, subsidies from China are not the problem; lower cost energy alternatives are driving the market. The only bright spot I see in solar is Suntech, based on technical analysis of the shares oversold under $2. Suntech's current oversold status should not result in more than a dead cat bounce. With over 10% of Suntech's float short, a short squeeze on positive news is not out of the question. I would like to suggest Suntech and Trina Solar as longer term holds looking for a breakthrough in the power/cost ratio. The first obstacle is an inability to trust the reporting numbers out of China. The second obstacle is surviving in an environment of lower energy prices. The third obstacle is the political environment. It's hard to handicap what politicians will do and if solar wasn't the center of attention before, it is now. Investors in solar will need a little bit of luck on their side, cost breakthroughs, and the wherewithal to withstand a volatile market -- nothing new for many.