The Biden administration announced Monday that it would waive tariffs on solar panels imported to the United States from Cambodia, Malaysia, Thailand and Vietnam for 24 months, reducing uncertainty for the U.S. solar energy companies that had been spooked by a Commerce Department investigation launched in March.
The announcement came as part of a package of measures to accelerate clean energy product development in the U.S. In addition to the waiver, President Biden invoked the Defense Production Act to upgrade the electrical grid and speed up investment in the domestic manufacturing of solar panels, building insulation, heat pumps and clean energy fuels.
"The stakes could not be higher," a document released by the White House said. "Failing to take these actions would deny consumers access to cost-cutting clean energy options, add risks to our power grid, and stall domestic clean energy construction projects that are critical to tackling the climate crisis."
Solar development roadblock
In March, the Commerce Department announced it was investigating a complaint filed by a small solar panel manufacturer in California against competitors in Cambodia, Malaysia, Thailand and Vietnam.
The company, Auxin Solar, charged that manufacturers in those countries were using Chinese-made components to assemble solar panels for sale in the U.S.
In 2011, the U.S. charged China with "dumping" solar panels in the U.S. market, a term for selling them at below cost. The Chinese imports were suffocating U.S. manufacturers, who could not profitably compete against the artificially low prices. As a result, the U.S. imposed tariffs of as much as 250% on Chinese-made solar panels.
Auxin Solar's complaint was that many of the solar panels coming from Cambodia, Malaysia, Thailand and Vietnam were really Chinese products with a misleading country of origin certification.
When the Commerce Department investigation was announced, U.S. solar projects were immediately thrown into disarray, with many halting altogether. The fear that tariffs might suddenly more than triple the cost of solar panels changed the potential costs of new projects. In addition, the fear that the government might impose retroactive tariffs made U.S. importers even more reluctant to bring them into the country.
A temporary reprieve
The administration's announcement on Monday includes language making it clear that the tariff waiver is meant to be a temporary "bridge" that will allow the solar power industry to continue to use imported panels of questionable origin until domestic production can be brought up to speed.
The White House said that President Biden is "reinforcing his commitment to safeguarding the integrity and independence of all ongoing trade investigations by career officials at the Department of Commerce and recognizing the vital role these processes play in strengthening our economy."
That language did not satisfy some in the industry who are trying to compete with low-cost imports.
In a statement emailed to VOA, Auxin Solar CEO Mamun Rashid criticized the Biden administration for "interfering" with the Commerce Department's investigation.
"By taking this unprecedented — and potentially illegal — action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law," Rashid said. "Since filing this case, Auxin has been well under way to scaling up. If the President will follow through on his stated intent to support the U.S. domestic industry — including grants to scale and produce upstream inputs like cells and wafers — Auxin is ready, willing, and able to meet that challenge."
Arizona-based First Solar, one of the largest manufacturers of solar panels in the U.S., was sharply critical of the administration's decision.
"First Solar is deeply disappointed in today's announcement, which only benefits China's state-subsidized solar industry," Samantha Sloan, the company's vice president of global policy, said in a statement.
"Today's proclamation directly undermines American solar manufacturing by giving unfettered access to China's state-subsidized solar companies for the next two years. This sends the message that companies can circumvent American laws and that the US government will let them get away with it as long as they're backed by deep-pocketed political pressure campaigns."
Sloan also criticized the decision to use the Defense Production Act to increase domestic solar manufacturing, calling it "an ineffective use of taxpayer dollars."
Trade groups pleased
Companies in the business of installing solar power projects greeted the administration's decision warmly, however.
"President Biden's proclamation today to use the full power of executive authority to jumpstart the domestic solar industry is a bold act of leadership," Heather Zichal, CEO of the American Clean Power Association, an industry trade group, said in a statement.
"The President's announcement will rejuvenate the construction and domestic manufacturing of solar power by restoring predictability and business certainty that the Department of Commerce's flawed inquiry has disrupted," Zichal said.
In another statement, Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, another trade group, said, "While the Department of Commerce investigation will continue as required by statute, and we remain confident that a review of the facts will result in a negative determination, the president's action is a much-needed reprieve from this industry-crushing probe."
"Today's actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home," Hopper said. "During the two-year tariff suspension window, the U.S. solar industry can return to rapid deployment while the Defense Production Act helps grow American solar manufacturing