A U.S. Commerce Department investigation into possible import tariff evasion by China-based solar panel makers is a blow to broader U.S. climate change and clean energy goals.
Prior to 2012, the vast majority of solar panels in the United States were imported from China. That year, an Obama administration investigation found that many Chinese manufacturers were illegally selling panels at low prices in the US market, undermining any hope for US manufacturers. The administration therefore imposed rigid tariffs of up to 250% which remain in place today. In the years that followed, solar panel production in the United States increased slightly, but most panels are still imported, now from Cambodia, Malaysia, Thailand and Vietnam. These four countries were responsible for 85% of imports in 2021, according to intelligence firm Rystad Energy.
Chinese solar panel producers could avoid US import tariffs
In March, an American manufacturer called Auxin Solar filed a petition alleging that the Chinese companies are in fact the ones operating the solar factories in Southeast Asia, effectively relocating their operations in order to circumvent US tariffs. The Commerce Department decided to be continued. If that’s true, and if the administration decides to extend tariffs to those countries, manufacturers could end up paying up to $3.6 billion in retroactive tariffs, according to Rystad. A decision is expected in August.
But in the meantime, to forestall any further potential liability, many Southeast Asian solar producers have halted their exports to the United States. The result is that up to 64% of solar installations planned this year could be canceled, a major setback for the administration’s goal that the United States will get all of its electricity from low-carbon sources. 2035.
“This could be the most disruptive event the U.S. solar industry has ever faced,” said Marcelo Ortega, renewable energy analyst at Rystad.
In the best-case scenario, it would take at least until 2024 for U.S. solar makers to grow enough to make up for lost imports, according to Rystad. Meanwhile, a bipartisan group of U.S. senators argued in a letter of March 9 that the investigation “threatens thousands of American solar jobs”.