Are new solar tariffs coming soon? Here’s what you need to know

The House just voted to undo a pause on solar tariffs. If the repeal becomes law, tariffs would derail the U.S. solar rollout this year — but that’s unlikely.
By Dan McCarthy, Eric Wesoff

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A woman in a factory uniform inspects a large solar panel inside an industrial facility
(CFOTO/Future Publishing/Getty Images)

The fight to impose new tariffs on the U.S.’ main source of solar panels is moving forward in Congress — but it’s more likely to produce fodder for campaign ads than policy change.

On Friday, the U.S. House of Representatives voted 221202 to overturn President Biden’s two-year pause on new tariffs for solar panels produced in four Southeast Asian countries. The effort is motivated by a combination of tough-on-China bravado and made-in-America protectionism, with the stated goal being to bolster U.S. solar manufacturing.

But it wouldn’t be good for U.S. solar deployment. Solar farms are expected to account for nearly half of new U.S. power plant capacity added this year, and those installations rely heavily on panels manufactured by the Asian countries that dominate the global solar supply chain. In 2021, about 80 percent of new solar panels used in U.S. installations were imported, and of those imports, about 80 percent came from Cambodia, Malaysia, Thailand and Vietnam. New tariffs would decimate the astounding growth of this clean energy sector, and in the process potentially derail the decarbonization of the world’s second-largest emitter of CO2.

Last Friday’s vote represents the first — and lowest — hurdle in the Republican-led race to reinstate the solar tariffs, but the effort is unlikely to clear the final bar needed to repeal Biden’s moratorium.

Canary Media has covered the back and forth over new solar tariffs extensively since it began last spring. We’ve pulled together five questions and answers to help you understand what’s happening with solar tariffs now and what it all means.

How did we get here again?

It all started last year with a tiny California-based company called Auxin Solar.

The solar-panel manufacturer managed to convince the U.S. Department of Commerce to investigate whether new tariffs should be imposed on panel manufacturers in Cambodia, Malaysia, Thailand and Vietnam for allegedly circumventing existing tariffs on Chinese solar companies.

The threat of new tariffs, which could have been applied retroactively, brought the industry to a halt, making it difficult for developers to obtain solar panels and essentially freezing utility-scale solar project development in the U.S. The panicked industry characterized the tariff threat as an existential crisis.” In June 2022, Biden gave the industry a reprieve by declaring that no new tariffs would be imposed for 24 months.

But in recent months, an effort to overturn the solar-tariff pause has gained steam. Republican lawmakers, joined by a number of Democrats, have invoked the Congressional Review Act (CRA), which gives Congress 60 legislative days to decide whether to undo major regulations enacted by federal agencies.

The House vote that took place last Friday was the first major step in the CRA process. 

What’s next after the House vote? 

The Senate takes its turn voting on the resolution. That could happen as soon as this week.

As with the House vote, all that’s needed for the resolution to advance is approval by a simple majority, which is all but guaranteed. All 49 Republicans in the Senate are expected to vote for it, and four Democrats are expected to join them: Sherrod Brown of Ohio, Bob Casey of Pennsylvania, Ron Wyden of Oregon and, of course, Joe Manchin of West Virginia.

If and when the Senate approves the resolution, it will go to President Biden’s desk, just like any other bill. And there it will stop. He’s already vowed to veto it.

So, that’s it? Biden vetoes the resolution, and then the solar-tariff ordeal is all settled?

Not quite. Congress gets a chance to override the president’s veto. But doing so requires lawmakers to meet a challenging threshold: Both the House and Senate would need two-thirds of their members to vote in favor of overturning the veto.

The House resolution picked up 12 Democratic votes during Friday’s vote, but if the voting lines remained the same the second time around, it would be about 70 votes shy of the supermajority needed to overturn a veto.

It’s the same basic story for the Senate. The effort has managed to peel off a handful of Democratic senators, but based on what we know now, the resolution would still be well short of the 67 votes needed to override a Biden veto.

What’s next from here? 

Though the threat of tariffs has been paused, the Commerce Department has continued investigating Auxin’s complaint. In December, the department released a preliminary finding that some Southeast Asian manufacturers had indeed been circumventing tariffs on Chinese goods. If that finding is finalized, new tariffs will be imposed in June 2024 (but not retroactively).

The Inflation Reduction Act, passed last August, has the potential to jump-start American solar manufacturing, but there still won’t be enough factory capacity up and running by June 2024 to ensure that domestic demand for solar panels is met. So if new tariffs are put in place next year, panel shortages could once again debilitate U.S. utility-scale solar.

And if a CRA resolution does overcome the odds and roll back Biden’s two-year tariff pause, then those debilitating shortages could begin this year instead of next.

By the way, do tariffs even work?

The evidence isn’t convincing.

Import tariffs are intended to level the playing field” between foreign manufacturers and domestic ones. But U.S. tariffs on Chinese solar panels have been in place in one form or another since 2012 — under Obama and then Trump and then Biden — and they have not yet revived U.S. solar-panel manufacturing.

Tariffs have plenty of unintended consequences, though. Here’s a notable one: They’ve contributed to the U.S. having some of the world’s highest costs for utility-scale solar.

Dan McCarthy is news editor at Canary Media.

Eric Wesoff is editorial director at Canary Media.