WASHINGTON: The United States is preparing to impose steep penalty duties on solar panel makers who finished their products in Southeast Asian countries including Thailand to avoid tariffs on Chinese-made goods.
The duties threaten to push up the cost of renewable power and slow the development of clean energy in the United States if solar power developers cannot find other sources of supply.
Some solar cells and modules exported from Southeast Asia could now face tariffs as high as 254% starting in June 2024, after the Commerce Department determined that companies operating in Thailand, Cambodia, Malaysia and Vietnam have been avoiding the longstanding duties.
The US has had anti-dumping duties in place for a decade on Chinese-made solar products after a Commerce investigation found Chinese companies were receiving unfair government subsidies that kept their prices artificially low.
The decision to be announced on Friday singles out five companies that are either Chinese or linked to China as circumventing tariffs: Canadian Solar Inc in Thailand; BYD (HK) Co Ltd and New East Solar (Cambodia) Co Ltd in Cambodia; and in Vietnam, Trina Solar Science & Technology and Vina Solar Technology Co, a unit of Longi Green Energy Technology Co.
The US solar industry is heavily reliant on imports from Southeast Asia, with the affected countries supplying roughly 75% of modules used in the US. Under the ruling, all other solar manufacturers in the four countries will be hit with new duties unless they certify that their exports don’t evade the tariffs. Most companies facing new duties would see combined rates under 100%.
A senior Commerce official said the investigation — which included site visits and factory audits — is a signal the administration is taking trade enforcement seriously as well as a warning to other companies engaging in similar circumvention schemes.
Ultimately, the ruling should bolster US solar manufacturers, which are already expanding domestic production capacity with incentives from last year’s climate law. Many US power companies had started diversifying their supply chains ahead of the decision, to minimise potential exposure to new tariffs and a US forced-labour law aimed at products tied to the Xinjiang region of China.
The Commerce Department’s decision could also inflame tensions between Washington and Beijing, even as the two superpowers look for ways to improve relations.
In the short term, the ruling could accelerate US purchases of affected solar equipment before the expanded duties go into force next year, as renewable power developers look to stockpile tariff-free gear.
Expanded duties would normally apply already, but President Joe Biden in 2022 approved a two-year grace period designed to sustain US solar deployments while domestic manufacturing ramps up and developers work to diversify suppliers.
At least three companies won’t be hit with expanded tariffs — Hanwha Q Cells Malaysia Sdn Bhd, Jinko Solar Technology Sdn Bhd, and Boviet Solar Technology Co Ltd — after the department concluded they weren’t trying to evade the duties.