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Sector Wrap: Tariffs hit solar power stocks

NEW YORK (AP) -- Shares of solar power companies fell Wednesday after the European Union said it plans to slap tariffs on solar products made in China.

On Tuesday the EU said it will impose duties averaging 47 percent on solar panels, cells and wafers made in China. The full tariffs won't go into effect until early August, giving the two sides more time to negotiate. The measures would hurt manufacturers that are already struggling with excess production capacity and a price-cutting war.

Citi Investment Research analyst Jason Channell said Wednesday that the EU and China seem far apart on a resolution and there will be "no winners" in the dispute. He said the EU's preliminary tariffs are lower than he expected, but in the longer term trade relations between Europe and China could get worse because of the tariffs, making it harder for polysilicon and solar equipment companies to export goods to China.

"Strategically, tariffs are uneconomic for Europe and we see little rationale for Europe to impose tariffs at this stage of the cycle," said Channell. "However, with U.S. tariffs already being set last year, these decisions are not always rational and can mask political intentions."

He said the hardest-hit companies would include Yingli Green Energy Holding Co. and Trina Solar Ltd., while First Solar Inc., SunPower Corp., and SunEdison Inc. could benefit indirectly.

Separately Goldman Sachs downgraded shares of JA Solar and Trina Solar.

In a press release, Yingli Green Energy said the tariffs will lead to higher prices and stagnation in the solar industry in Europe. It said China and Europe should resume talks.

Yingli said its products will be subject to a preliminary duty of 11.8 percent until Aug. 5 and a duty of 37.3 percent from Aug. 6 till a final ruling in December.

JA Solar Holdings Co. shares fell 70 cents, or 9.2 percent, to $6.90, while Trina Solar shares dropped 53 cents, or 8.7 percent, to $5.60. Yingli shares lost 16 cents, or 5.4 percent, to $2.79. SunPower shares fell 20 cents to $18.47 and First Solar shares slid $1.59, or 3 percent, to $51.03. SunEdison gave up 5 cents to $7.89.