Biden admin slaps more tariffs on several Chinese solar manufacturers

The Commerce Department has concluded its probe of Chinese solar firms’ tariff evasion. The ruling could derail the rapidly growing, import-dependent U.S. solar industry.
By Eric Wesoff

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(Carolyn Cole / Los Angeles Times via Getty Images)

The U.S. Department of Commerce has made it official: It’s imposing import duties on Chinese solar manufacturers that have been evading tariffs and are undermining American industries,” according to the trade law arbiter.

The Commerce Department found that a number of major Chinese solar panel suppliersBYD, Canadian Solar, Trina Solar and Vina Solar — circumvented existing antidumping tariffs by routing products to Cambodia, Malaysia, Thailand or Vietnam for minor processing” before shipment to the U.S. The companies, which supply a sizable portion of American solar panels, will now face heavy tariffs starting in June 2024. Duties were also levied on a fifth company, Cambodia-based New East Solar, which failed to comply with the investigation.

This ruling marks the conclusion of the trade probe that was launched in March 2022 after a petition from tiny, underperforming California-based manufacturer Auxin Solar claimed that Chinese companies were evading existing solar tariffs and requested that new penalties be imposed. At the time, the threat of steep (and potentially retroactively applied) fines paralyzed the U.S. solar industry — until President Biden issued an executive order pausing the tariffs through 2024. But the president merely kicked the can down the road with that order; as we approach the looming imposition of tariffs next summer, the solar industry will confront the same existential threat once again.

That’s because the U.S.’ rapidly expanding utility-scale solar market is dependent on inexpensive imported solar panels that mostly come from Chinese suppliers like those called out by the Commerce Department. And that’s not changing anytime soon.

The Inflation Reduction Act is driving unprecedented investment in domestic solar manufacturing from First Solar, Maxeon, Qcells and many other firms. But the U.S. likely won’t be able to satisfy its own demand for a decade, and it certainly won’t be able to ramp up to meet the country’s solar demand in the 12-month pause before Biden’s Commerce Department begins imposing the tariff. Even optimistic forecasts expect it to take years for the U.S. to attain solar self-sufficiency.

And although Commerce stated that the ruling represents its commitment to holding the [People’s Republic of China] accountable for its trade distorting actions, which undermine American industries,” the ruling could instead undermine the U.S. utility-scale solar sector — an American renewable energy success story that needs to keep succeeding in order for the country to meet its climate goals.

The battle lines of the Auxin Solar trade saga are familiar, pitting American solar project developers hungry for low-cost Chinese hardware against American solar manufacturers trying to scale up and compete with inexpensive products that are subsidized by the Chinese government.

The Inflation Reduction Act contains incentives that serve as domestic manufacturing carrots, and the soon-to-be-reinstituted solar tariff is the stick. But while they are a handy prop for political grandstanding, tariffs are an ineffective tool for correcting market distortions and usually prove harmful to the American consumer.

Last May, Canary Media’s Julian Spector reported on the murky rules governing the Commerce Department’s investigation and the ability of the White House to intervene. The situation remains the same today: The decision-making process at Commerce is opaque, but the White House does have the option to choose to delay solar tariffs once more.

As the Biden administration weighs whether to act on this issue again, it will have to grapple with the fundamental question surrounding this trade policy debate: What’s preferable, protecting the U.S. solar manufacturing industry or facilitating a fast transition away from fossil fuels?

Check out Canary’s special series of in-depth coverage on the Auxin Solar tariff imbroglio.

Eric Wesoff is the editorial director at Canary Media.