US Department of Commerce Imposes Tariffs on Solar Firms for Skipping China Duties

The United States is gearing up to impose tariffs on numerous solar companies guilty of attempting to elude import duties on Chinese products by completing their products in other Southeast Asian nations.

Making a public declaration last Friday, the Department of Commerce (DOC) pointed the finger at the subsidiaries of Chinese enterprises BYD, Trina Solar, Vina Solar, and Canadian Solar, accusing them of skirting U.S. tariffs on Chinese solar cells and panels. Their trick? Executing insignificant processing to complete their products in nations such as Cambodia, Malaysia, Thailand, and Vietnam.

One more company, named New East Solar was identified and it will face punitive measures after outright refusing to participate in an on-site audit of its operations run in Cambodia.

How are the sanctions to be implemented? The tariff impositions on the companies caught in the act of duty evasion will not be enforced instantly. Instead, commencement is scheduled for June 2024.

This provides the U.S.'s solar importers plenty of time on their hands, to reconfigure supply chains, and reassure that sourcing does not involve the companies condemned for breaching U.S. regulations, according to the announcement made by the DOC.

Amidst this tariff imposition, the U.S. solar manufacturers are at a shocking advantage. For numerous years, these manufacturers have been at loggerheads, battling to compete against their powerful Chinese counterparts.

Nevertheless, the tables seem to be turning. Under President Biden's Inflation Reduction Act, these previously struggling manufacturers are due to receive an influx of funds, which will significantly boost the sector.

However, it is of importance to note that the U.S. has maintained anti-dumping tariffs on Chinese solar products for an extended period, over a decade to be precise. This is not a novel event, as a formative probe by the DOC had found Chinese companies benefitting handsomely from unwarranted government subsidies.

Furthermore, solar entities producing products in or sourcing components from China have previously been viewed with scepticism over the utilization of forced labor, specifically from Uyghurs and other predominantly Muslim ethnic minorities relentlessly persecuted by the Chinese government.

An overwhelming majority of U.S.'s solar supplies, amounting to around 80%, are sourced from Cambodia, Malaysia, Thailand, and Vietnam. To comply with U.S. import regulations, companies operating in these nations undertake a certification process that illustrates their compliance with U.S. tariffs, demonstrating that solar cells and panels consist of non-Chinese wafers in addition to three other key components.

With the announcement of these tariffs, solar industry companies, and trade groups have voiced their opposition, arguing that these measures will undermine the Biden administration's mission to enhance the solar industry, marking a key step towards a robust green energy plan.

Abigail Ross Hopper, president of the Solar Energy Industry Association, did not hold back in expressing her disagreement stating the DOC is in contradiction with the administration's clean energy objectives. Hopper defended her stance, asserting the solar industry's fundamental disagreement with the DOC's decision.

A representation for Trina Solar also expressed discomfort, criticizing the move while highlighting the enormous investments made by the company in producing solar cells and modules in Thailand and Vietnam. The firm claimed this decision will inflate the costs of virtually all U.S. bound solar products, citing the supply constraint at a time when the demand for solar is exceeding all records.