Major US solar manufacturers call for strict new solar-panel tariffs

First Solar and Qcells, the two largest solar-panel manufacturers in the U.S., have joined a coalition of domestic suppliers calling for new tariffs on below-cost and state-subsidized panels imported from Cambodia, Malaysia, Thailand, and Vietnam. 

The coalition, calling itself the American Alliance for Solar Manufacturing Trade Committee, is filing petitions today with the U.S. International Trade Commission and the U.S. Department of Commerce. The cases are intended to spur an investigation into the trade practices of manufacturers in those four countries and the extent to which they are harming the U.S. solar industry. 

There have been a number of solar trade cases in the last decade — including the infamous Auxin Solar case in 2022 — but the current effort is notable for the involvement of First Solar and Qcells in the petitioning alliance. First Solar will have 14 gigawatts of vertically integrated U.S. solar-manufacturing capacity by 2026, according to the firm. Qcells expects its total production in Georgia to hit 8.4 gigawatts in 2024 across all layers of the supply chain — from polysilicon to wafers, cells, and the final panels, also known as modules. These are by far the largest players in the U.S., whereas earlier trade cases have been filed by less consequential solar manufacturers.

The case has wide support within the U.S. solar manufacturing industry, which has been in the midst of a revitalization since August 2022, when the Inflation Reduction Act was passed, authorizing significant subsidies for the sector. The other petitioners in today’s filing are Convalt Energy, Meyer Burger, Mission Solar, REC Silicon, and Swift Solar.

But the broader solar industry is split. Project developers who benefit from low-cost solar modules are opposed — as are prominent groups representing the solar and clean energy industries. 

“Today’s filing creates market uncertainty in the U.S. solar industry and poses a potential threat to the build-out of a domestic solar supply chain,” wrote the Solar Energy Industries Association, American Clean Power Association, Advanced Energy United, and American Council on Renewable Energy in a joint statement.

The Biden administration’s target of 80 percent carbon-free power generation by 2030 and 100 percent by 2035 is highly dependent on the aggressive growth of solar — and that growth could be throttled by new tariffs that raise prices on solar panels.

Pushing back against China

The new cases are aligned with recent trade-policy chatter from the Biden administration, which has been pressing the need to enforce trade laws and address Chinese dumping, in particular in the renewable energy sector. Last month, Treasury Secretary Janet Yellen gave a high-profile speech from a previously shuttered solar manufacturing facility in Georgia, warning about China’s ​“excess capacity” of solar panels, as well as electric vehicles and batteries. 

In order to get around American tariffs, Chinese panel manufacturers have moved a significant amount of production to four Southeast Asian countries — Cambodia, Malaysia, Thailand, and Vietnam. The companies continue to receive support from the Chinese government.

The coalition of manufacturers is accusing the four Southeast Asian countries of dumping, or selling a product in the U.S. for less than a company sells it for in its home market or less than its full cost of production. It’s illegal under U.S. law and World Trade Organization rules. The coalition is asking the U.S. government to impose anti-dumping duties, intended to offset the amount by which a module is sold below its fair value in the United States. It’s also asking for countervailing duties, intended to neutralize unfair subsidies provided by foreign governments to manufacturers such as financial contributions, low-interest loans, or discounted inputs like power or raw materials. 

“We’ve seen pricing at extremely low and unsustainable levels around the world, as low as 10 cents per watt … And here in the United States, … between 15 and 20 cents per watt and heading lower,” said Tim Brightbill, the lead attorney representing the petitioning manufacturers and partner and co-chair of the trade practice at law firm Wiley Rein. ​“China and Chinese-owned companies are manipulating our domestic market to benefit their economy and national security interests,” he said on a press call. 

Due to the glut of inexpensive imports from these countries, the United States now has an oversupply of solar panels, 30 gigawatts currently cloistered in warehouses, according to Brightbill.

“Nearly all of this capacity sitting in warehouses today was produced by Chinese-owned or China-headquartered companies,” he said.

And shipments from Southeast Asia are not slowing: Cambodia, Malaysia, Thailand, and Vietnam accounted for 84 percent of U.S. solar panel imports in the fourth quarter of 2023. That’s up from 78 percent in the third quarter, according to market analysis firm S&P Global.

This new trade case comes as the Biden administration is gearing up to impose a separate set of tariffs in June on some panel imports from the same four Southeast Asian countries. Biden announced in June 2022 that he would pause any such tariffs for two years, after an outcry from climate advocates and the clean energy industry, but now the two years are almost up. In August of 2023, the Biden administration decided that it would impose the tariffs, which are focused on circumvention — the practice of dodging tariffs by performing some manufacturing steps in another country — and were sparked by a petition from a then-little-known firm named Auxin Solar. Two years ago, advocates said the tariffs would derail U.S. climate goals.

Brightbill said the forthcoming circumvention tariffs are not sufficient to protect the domestic solar industry — hence the new case focused on dumping. 

“We think that the vast majority of imports from these four countries would not be covered by the circumvention case because so much of the manufacturing has moved into the four countries,” he said. ​“Even as the circumvention cases were filed and prosecuted, these Chinese-owned and Chinese-headquartered companies moved more and more of their manufacturing out of China and into these four countries.”

The Commerce Department and International Trade Commision should decide within 20 days whether to launch a probe based on the new petitions, and if they do, it will take up to a year to issue a final determination, but preliminary duties could be imposed in as little as four months. 

The petition calls for Southeast Asian solar manufacturers found to be in violation of trade law, or those that refuse to cooperate in investigations, to face penalties ranging from 70 percent of module cost in Thailand to 272 percent in Vietnam. 

The carrot or the stick?

This push for additional tariffs has solar and clean energy industry groups alarmed. The Solar Energy Industries Association, American Clean Power Association, Advanced Energy United, and American Council on Renewable Energy warn it ​“will lead to further market volatility across the U.S. solar and storage industry and create uncertainty at a time when we need effective solutions that support U.S. solar manufacturers.”

The groups argue that bolstering American manufacturers, instead of penalizing foreign manufacturers, is the way to go. They point to existing programs and incentives, like the Advanced Manufacturing Tax Credit created by the Inflation Reduction Act, as the best way ​“to expand domestic solar manufacturing and deploy clean energy at scale and speed to serve growing electricity demand.”

“America’s clean energy industry is urging the Biden administration to consider alternative solutions to address the petitioners’ concerns so that we can uplift American manufacturers and maintain a thriving clean energy economy across the value chain,” the four groups said.

The U.S. had about 9 gigawatts of solar module production capacity in 2022, and though that number jumped to 16 gigawatts in 2023, there’s still a massive gulf between U.S. manufacturing capacity and U.S. solar installations, which reached nearly 33 gigawatts in 2023. That means U.S. solar developers will need to continue importing panels. 

The industry organizations prefer to spur domestic production with the carrot of the current solar-manufacturing incentives, while First Solar, Qcells, and other solar builders would like the Biden administration to also wield the tariff stick. 

So far, the carrot seems much more effective. The subsidies in the Inflation Reduction Act have completely transformed the U.S. solar manufacturing landscape in under two years, spurring tens of gigawatts of new production — a massive turnaround, even if not enough to enable the U.S. to reach solar self-sufficiency anytime soon. 

Meanwhile, 10 years of tariffs on imported solar panels have not changed Asia’s manufacturing dominance — they’ve mostly served to raise prices on American consumers.