In a decision that could dramatically undercut President Joe Biden’s ambitious climate goals, the Commerce Department said Monday it is investigating whether imports of solar panels from Southeast Asia are circumventing anti-dumping rules that limit imports from China.
Clean energy leaders said the investigation—which could result in retroactive tariffs of up to 240%—would severely hinder the U.S. solar industry, leading to thousands of layoffs and imperiling up to 80% of planned solar projects in the United States. Such an outcome would jeopardize one of Biden’s top clean energy goals and run counter to his administration’s push for renewable energy such as wind and solar power.
The Commerce Department decision “signals that the Biden administration’s talk of supporting solar energy is empty rhetoric,” said Heather Zichal, CEO of the American Clean Power Association, a clean-energy group.
Zichal, who was White House energy adviser under President Barack Obama, called on Biden to reverse the decision immediately. “America’s solar workers and the clean energy community are watching and will remember,” she said, calling implications of the investigation “apocalyptic” for the industry.
“Overnight, the Commerce Department … drove a stake through the heart of planned solar projects and choked off up to 80% of the solar panel supply to the U.S.,” she said, adding that Biden ”must fix this now.”
The Commerce investigation follows a complaint by Auxin Solar, a small California-based manufacturer that said solar panels assembled in four Southeast Asian nations—Cambodia, Malaysia, Thailand and Vietnam—are circumventing rules intended to block imports of solar cells and panels from China.
The White House declined to comment, but a Commerce spokesman said the agency will “conduct an open and transparent investigation to determine whether circumvention” of U.S. trade law is occurring. “This inquiry is just a first step … and no additional duties will be imposed at this time,″ said spokesman Jeremy Edwards.
Auxin Solar CEO Mamun Rashid said he was grateful that Commerce officials recognized the need to investigate what he called “pervasive backdoor dumping” of solar panels by China. Solar manufacturers in smaller Asian countries use parts produced by Chinese companies as a way to keep costs down while skirting steep antidumping and countervailing tariffs on Chinese goods, he said.
“For years, Chinese solar producers have refused to fairly price their products in the U.S. and have gone to significant lengths to continue undercutting American manufacturers and workers by establishing … operations in countries not covered by those duties,” Rashid said. “Fair trade and enforcement of our trade laws are essential to rebuilding the American solar supply chain and making solar (panels) in America again.”
The Commerce Department action comes weeks after Biden extended tariffs imposed by former President Donald Trump on most solar panels imported from China and other countries. In a nod to his efforts to combat climate change and boost clean energy, Biden excluded tariffs on some panels used in large-scale utility projects.
Biden’s Feb. 4 announcement continued many Trump-era tariffs, but he exempted so-called bifacial solar panels that can generate electricity on both sides and are now used in many large solar projects. The technology was still emerging when the tariffs were first imposed by Trump.
Biden also doubled an import quota on solar cells—the main components of panels that go on rooftops and utility sites—to 5 gigawatts, allowing a greater number of imported cells used by domestic manufacturers.
Biden faced a choice among competing constituencies on solar power, a key part of his climate and clean-energy agenda. Labor unions support import restrictions to protect domestic jobs, while the solar industry relies in large part on cheap panels imported from Asia.
In a speech this month, Commerce Secretary Gina Raimondo said the U.S. must boost domestic manufacturing of products such as solar panels.
“The more we rely on other countries to make things for us, the more vulnerable we become to supply chain disruptions like we have seen over the past two years,” she said March 15, adding that “at least 95% of the market for the cells that go into solar panels is estimated to have components that were produced in China.”
Biden has set a goal to cut planet-warming greenhouse gas emissions by at least 50% below 2005 levels by 2030, and solar power is a key part of that agenda. A report last year by the Energy Department says solar has the potential to supply up to 40% of the nation’s electricity within 15 years—a tenfold increase over current solar output.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, which represents solar installers, called the Commerce investigation a “misstep” that could have a devastating impact on the U.S. solar market and result in tens of thousands of layoffs. The decision could result in retroactive tariffs of up to 240%, a possibility Hopper said would have an immediate and “chilling effect on the solar industry.”
Additional tariffs could cause the loss of 70,000 American jobs, including 11,000 manufacturing jobs, she said, and could result in a dramatic drop in solar installations and a corresponding increase in planet-warming greenhouse gas emissions from fossil fuels such as coal and natural gas.
“Solar prices are increasing, federal climate legislation is stalled and trade restrictions are now compounding,” Hopper said. “Commerce should quickly end this investigation to mitigate the harm it will cause for American workers and our nation’s efforts to tackle climate change.”
Trump approved tariffs on imported solar-energy components in 2018, saying his administration would always defend American workers and businesses from unfair competition. The tariffs were initially set at 30% and later cut to 18% and then 15%. They were set to expire without action by Biden.
Under Biden’s decision, tariffs will be set at 14.75% and gradually reduced to 14%.
Since the tariffs were imposed, solar-panel production in the U.S. has tripled. Chinese and South Korean companies have set up factories in Georgia, Florida and Alabama, and an American firm, First Solar Inc., expanded domestic production at a plant in Ohio.