U.S. Trade Officials Consider New Tariffs on Solar Panels

By Nichola Groom

(Reuters) – U.S. trade officials this week may impose new tariffs on solar panels from four Southeast Asian nations that American manufacturers accuse of employing unfair subsidies, undermining the competitiveness of U.S. products.

The announcement, scheduled for Tuesday, marks the first of two preliminary decisions from the Commerce Department this year in a trade case initiated by Korea’s Hanwha Qcells, Arizona-based First Solar (NASDAQ:FSLR), and several smaller firms aiming to safeguard significant investments in U.S. solar manufacturing.

Domestic producers contend that competition from inexpensive imports by Chinese firms operating in Malaysia, Vietnam, Thailand, and Cambodia jeopardizes President Joe Biden’s objective to enhance the domestic production of clean energy technologies essential for fighting climate change.

Tim Brightbill, the attorney for the group, expressed optimism, saying, “They are hopeful that these cases will help to level the playing field.”

For the first time, the Commerce Department’s decision will evaluate the effects of cross-border subsidies, such as those provided by the Chinese government to manufacturers in Vietnam or other locations. Previously banned, such countervailing duties have now been permitted following a rule finalized this year.

In its April petition, the Hanwha-led American Alliance for Solar Manufacturing Trade Committee claimed that Chinese manufacturers in the four Southeast Asian countries benefit from substantial subsidies from local governments, including reduced financing, electricity, land, tax breaks, and more. They also alleged that these companies receive support from China in the form of discounted raw materials, components, and assistance through the Belt and Road Initiative.

A related anti-dumping case is expected to see a preliminary ruling in November. Countervailing duties are generally lower than anti-dumping duties, the latter aimed at preventing overseas producers from selling products below market value.

The U.S. currently imposes various tariffs on solar imports.

However, not all U.S. solar manufacturers support new tariffs on solar imports. Companies establishing panel factories depend on low-cost solar cells from Southeast Asia to assemble panels in the United States, many of which are owned by major Chinese manufacturers.

Solar project developers are also concerned about the potential impact of tariffs, as they may increase the already high costs of panels in the U.S. compared to global prices.

Jim Murphy, president of Invenergy, a Chicago-based project developer that co-owns Ohio solar panel manufacturer Illuminate USA with China’s Longi, stated, “Imposing tariffs on solar cell imports – when there’s currently no solar cell manufacturing in the U.S. – will only enhance the profits of incumbent manufacturers and will stifle America’s ability to onshore the solar supply chain and meet the fast-growing demand for clean, affordable, and reliable power supply.”