The fight over US solar tariffs hasn’t gone away — it’s just hibernating

Auxin, a small California-based builder of solar panels, filed a lawsuit against the U.S. Department of Commerce and U.S. Customs and Border Protection in late December, claiming that President Biden’s 2022 order to pause import tariffs on a range of solar products has harmed domestic companies.

The now-paused tariffs are a punitive measure against Chinese-state-supported solar manufacturers that are building modules in Malaysia, Thailand, Vietnam and Cambodia in an attempt to dodge or ​“circumvent” anti-dumping charges.

The anti-dumping duties are not new — they were first imposed by Obama, expanded by Trump and then continued by Biden. But the penalties meant to crack down on Southeast Asian panels circumventing these anti-dumping duties, introduced in response to a 2022 complaint by Auxin Solar, were new — and wildly disruptive to the industry. When the new round of tariffs was imposed in the spring of 2022, the solar industry characterized them as an ​“existential threat” that resulted in the delay and cancellation of projects.

President Biden simultaneously saved the day and kicked the can down the road by instituting a two-year pause on any additional tariffs in June 2022 to ​“ensure the U.S. has access to a sufficient supply of solar modules to meet electricity generation needs while domestic manufacturing scales up,” according to a White House statement.

While Auxin’s latest lawsuit is not itself a major moment for the U.S. solar industry, it’s a reminder that the existential threat of tariffs has never really disappeared. In fact, it’s scheduled to rear its head again in just a few short months. During Biden’s pause, the wheels of Commerce’s investigation kept turning; a preliminary decision was issued in December 2022, followed by a final decision in August 2023 that reinstated all tariffs on certain Asian-built solar modules starting in June 2024.

The high-growth U.S. solar market is dominated by utility-scale installations, which rely on low-cost Asian imports. And despite the solar module manufacturing spree accelerated by the 2022 Inflation Reduction Act, it will be years until the U.S. can build up enough production capacity to supply all of the domestic solar projects it has planned. The U.S. had about 9 gigawatts of solar module production capacity in 2022, and though that number has climbed since then, there’s still a massive gulf between manufacturing capacity and solar installations, which reached 33 gigawatts in 2023.

While the IRA is enabling U.S. solar manufacturers to bring costs down, 10 years of tariffs on imported solar products have resulted in the U.S. having some of the world’s highest prices for solar modules and utility-scale solar.

In response to the tariffs, Asian manufacturers have created a new, separate and expensive supply chain outside of China in order to game the U.S. rules. But U.S. solar tariffs have not made unviable domestic companies like Auxin more competitive; instead, they have simply raised the cost of solar for U.S. developers and consumers.

That’s because tariffs don’t work. There’s scant evidence to show that such penalties have ever ​“leveled the playing field” in any real way or spurred domestic production of solar panels — or any other commodity, for that matter.

There’s only one policy pathway that will let the U.S. achieve its aggressive decarbonization targets: allow solar module imports that meet ethical-labor requirements without excessive tariffs until the domestic industry scales up in a meaningful way.