20-8-2023 (WASHINGTON) The United States is set to impose significant penalty duties on solar panel manufacturers that assemble their products in Southeast Asian countries, including Thailand, in an effort to evade tariffs on Chinese-made goods.
These duties could potentially increase the cost of renewable energy and hinder the growth of clean energy in the United States if solar developers cannot secure alternative sources of supply.
Starting in June 2024, certain solar cells and modules exported from Southeast Asia may face tariffs as high as 254%. This decision comes after the Commerce Department determined that companies operating in Thailand, Cambodia, Malaysia, and Vietnam had been circumventing longstanding duties.
The United States has maintained anti-dumping duties on Chinese-made solar products for a decade. These duties were implemented following a Commerce investigation that uncovered unfair government subsidies provided to Chinese companies, artificially lowering their prices.
The impending announcement singles out five companies, either Chinese or linked to China, that have been circumventing tariffs: Canadian Solar Inc in Thailand, BYD (HK) Co Ltd and New East Solar (Cambodia) Co Ltd in Cambodia, and Trina Solar Science & Technology and Vina Solar Technology Co in Vietnam, a unit of Longi Green Energy Technology Co.
The US solar industry relies heavily on imports from Southeast Asia, with these countries supplying approximately 75% of modules used in the US. Under the ruling, all other solar manufacturers in the four countries will face new duties unless they can certify that their exports do not evade the tariffs. In most cases, the combined rates for companies subject to new duties would be less than 100%.
A senior Commerce official highlighted that the investigation, which included site visits and factory audits, sends a strong message about the administration’s commitment to trade enforcement and serves as a warning to other companies engaged in similar circumvention schemes.
Ultimately, this decision is expected to benefit US solar manufacturers, who are already expanding domestic production capacity due to incentives from last year’s climate law. Many US power companies have been diversifying their supply chains in anticipation of this decision to minimize their potential exposure to new tariffs and to comply with a US forced-labor law related to products associated with China’s Xinjiang region.
The Commerce Department’s ruling could also escalate tensions between Washington and Beijing, even as the two superpowers seek ways to improve their relations.
In the short term, this decision may lead to accelerated purchases of affected solar equipment in the United States before the expanded duties come into effect next year, as renewable energy developers aim to stockpile tariff-free equipment.
Normally, expanded duties would already be in place, but President Joe Biden approved a two-year grace period in 2022 to support US solar deployments while domestic manufacturing capacity increases and developers seek alternative suppliers.
At least three companies will not face expanded tariffs: Hanwha Q Cells Malaysia Sdn Bhd, Jinko Solar Technology Sdn Bhd, and Boviet Solar Technology Co Ltd, as the Commerce Department concluded that they were not attempting to evade the duties.
