US Solar Industry Braces for Impact as Department of Commerce Weighs Tariff Evasion Findings
Published · 3 min read
American solar panel imports during the second quarter of this year have seen a remarkable surge of 90.5% compared to the same period last year, raising concerns about tariff evasion by Chinese manufacturers. The solar industry’s anticipation grows as the US Department of Commerce (DoC) prepares to unveil its final decision later this month, examining whether Chinese suppliers skirted tariffs by routing their products through Southeast Asian nations.
According to a recent analysis by S&P Global Market Intelligence, the import landscape revealed that Vietnam emerged as the predominant supplier, accounting for 31.2% of imports, followed by Thailand (22.5%), Cambodia (13.7%), and Malaysia (12.9%). These countries collectively contributed to an 86.5% share of total US solar panel imports, surpassing the usual 80% average. India secured the fifth position with a 6.2% share.
The second quarter of this year marked a historic milestone, registering the highest import levels over a three-month period. This surge signifies the fourth consecutive quarter of escalating imports since President Joe Biden’s decision in June 2022 to grant a two-year tariff waiver on crystalline-silicon PV cells and panels from Southeast Asia. The move, driven by pressure from clean energy advocates, solar product importers, and industry players, aimed to ensure short-term US supply and allow domestic suppliers time to bolster capacity to meet the anticipated surge in demand post-2024.
Critics, however, lambasted the decision for potentially placing US manufacturers at a disadvantage against Chinese counterparts benefiting from substantial state subsidies. The decision appeared to preempt DoC’s final report on Chinese manufacturers’ evasion tactics, which was initially set to guide subsequent actions.
In December of the preceding year, DoC’s initial findings indicated that four out of eight prominent Chinese solar suppliers had attempted to evade US tariffs. BYD Cambodia, Canadian Solar, Trina Solar in Thailand, and Vina Vietnam were found to be involved in these tariff avoidance strategies. An additional 22 companies remain under investigation.
Four other companies within the investigation were deemed compliant. These entities included Boviet Solar in Vietnam, New East Solar Cambodia, and the Malaysian branches of Hanwha Q CELLS and Jinko Solar.
Should the DoC conclude that Chinese-affiliated firms violated US trade regulations, they could potentially face retroactive duties and/or new tariffs ranging between 50% and 254%. President Biden confirmed that he would not extend the tariff moratorium beyond its expiration date on June 6, 2024. However, industry pressure and political considerations in the lead-up to the 2024 national elections might sway this decision.
In the year since President Biden enacted the Inflation Reduction Act, a landmark federal climate legislation, the private sector has committed to invest nearly $20 billion in new US solar factories across the entire supply chain, according to the Solar Energy Industries Association (SEIA). Most of this potential investment is anticipated to come from foreign companies seeking to capitalize on the law’s unprecedented federal subsidies.
Companies specializing in clean energy products such as solar panels and electric vehicle batteries could stand to gain billions of dollars in tax credits throughout the next decade. Notably, First Solar, the largest US solar panel manufacturer, recently announced plans to invest up to $1.1 billion in a new manufacturing facility in Louisiana. This marks its fifth such facility in the United States, with the potential to receive as much as $710 million in subsidies this year alone.
S&P Global Market Intelligence forecasts that US panel production capacity could reach 25.7 GW by the close of 2023, nearly doubling from the 14.4 GW recorded at the conclusion of the previous year. As the solar industry continues to expand, the impending DoC decision on tariff evasion tactics looms large, potentially reshaping the landscape for US solar imports and domestic manufacturing capacity.
