The US Department of Commerce imposes tariffs on solar energy imports from Southeast Asia

The US Commerce Department yesterday announced the imposition of provisional duties on imports of solar cells and panels from four Southeast Asian countries, a victory for domestic panel makers who say cheap imports are undermining their businesses.

In May, the Ministry of Commerce announced that it was initiating anti-dumping and countervailing duty investigations on crystalline silicon photovoltaic (PV) cells from Cambodia, Malaysia, Thailand and Vietnam. The investigation came a month after the American Alliance filed a trade case before the Solar Manufacturing Trade Committee, which meets seven leading solar energy producers, including South Korea’s Hanwha Qcells USA Inc., Switzerland’s Meyer Burger, Norway’s REC Silicon and American companies First Solar Inc. and Mission Solar Energy LLC.

The committee argued that Chinese companies with factories in the four countries have taken advantage of unfair Chinese government subsidies and flooded the U.S. market with panels priced below the cost of production. This has caused prices to fall by more than 50 percent, jeopardizing their significant investments in U.S. solar energy production. It asked the Biden administration to impose tariffs on panels and cells from the four countries.

In August, the Ministry of Commerce certain that solar cells and modules produced in Cambodia, Malaysia, Thailand or Vietnam using components from China and then exported to the United States circumvented existing anti-dumping and countervailing duties on solar cells from China.

In yesterday’s ruling, the Commerce Department said that anti-subsidy countervailing duties will henceforth be applied to all solar energy imports from the four Southeast Asian countries, which together about 80 percent of U.S. imports in 2023 in dollar terms, according to Reuters.

The trade has set preliminary general tariffs for Cambodia at 8.25 percent; 9.13 percent for Malaysia; 23.06 percent for Thailand; and 2.85 percent for Vietnam. It has also set different rates for specific companies. For many imports from Thailand and Vietnam, the tariffs will apply retroactively, going back 90 days to early July. This is the product of one separate complaint of the commission, which argued that exports of PV cells from Vietnam and Thailand soared after reports of the trade investigation began circulating in mid-year.

According to Reuters, Commerce’s rates are lower than many expectedalthough they could rise when the Commerce Department issues its final order, expected in April. Tim Brightbill, attorney at Wiley Rein in Washington, told reporters that “some margins certainly do not yet reflect the full extent of government subsidies taking place in the sector,” and said the trade could increase duties in its final decision.

Yesterday’s announcement too the first of two preliminary decisions are expected in the case this year. The second concerns the Committee’s allegations that solar energy imports from the targeted countries are being dumped into the US market at prices below the cost of production. will be announced next month.

The Commerce Department’s decision reflects how Chinese companies have responded to U.S. tariffs and tariffs by shifting production to third countries where such measures are not in place. Given the extent to which Southeast Asia’s supply chains are linked to those from China, this portends the imposition of more duties on the region as Washington seeks to hobble Chinese producers and protect its own markets.

However, current protectionist measures may have unintended consequences, especially for US companies that rely on cheap solar energy imports. It also has the potential to limit the US’s ability to accelerate the transition to green energy. According to BloombergThe case “has drawn opposition from some foreign manufacturers and domestic renewable energy developers, who argue that tariffs could give an unfair advantage to larger established U.S. manufacturers while increasing the cost of solar projects.”