Trump mulls raising tariffs on solar imports

In the final results of the antidumping duty administrative review on solar imports from China during the period from December 2017 to Nov. 30, 2018 released at the end of September, the International Trade Administration raised the tariff rate by 8% compared with the preliminary review, meaning that Chinese PV manufacturers will have to pay the difference.

Specific tariff is imposed on a total of 18 Chinese PV manufacturers, with the rate averaging at 68.93%. The remaining manufacturers are subject to a tariff rate of 238.95%.

According to China Customs report from InfoLink, China exported a combined 63 MW of cells and modules to the U.S. during the period. Given the sheer export volume, impact on manufacturers’ finance is limited.

Antidumping and countervailing duties have continued for solar imports from China, with the rate decreasing each year. AD/ CVD, coupling with Section 201 and 301 tariffs, bring increased costs to Chinese manufacturers to export modules to the U.S. Therefore, they have instead been exporting bifacial modules that have remained excluded from the Section 201 tariffs thus far.

However, the proclamation issued on Oct. 10 by President Trump made another U-turn on his decision regarding bifacial tariff exemption. Under the residential proclamation, the exclusion would be revoked, and the scheduled fourth-year tariff would be raised from 15% to 18% in 2021.

The proclamation provides a 15-day window for legal challenge.

The U.S. introduced the Section 201 tariffs in 2018 to boost the domestic PV manufacturing. The four-year tariffs, started at 30% the first year but were set to decrease 5% annually, is imposed on solar cell and module imports. The fourth-year tariff is expected to decline to 15% in 2021 and sunset in February 2022.

While the solar tariffs imposing since January 2018 help spur domestic PV manufacturing and market share, Trump said the exclusion of bifacial modules from the safeguard tariffs has impaired the tariff policy for it allows China to export large volume of bifacial modules to the U.S., and so it is necessary to close the exclusion and raise tariff rates.

It is believed that the US Court of International Trade will block the decision against bifacial exemption. However, the US industry professionals’ attitude toward the proclamation, which will come into effect 15 days after it was issued, is pessimistic. They argue that the tariffs will harm solar demand as well as employment rate in the U.S.

Looking at the long term, the US market has growth potential given the solar investment tax credit (ITC) is generous and its schedule allows demand to persist, while developers continue to engage in building projects to spur solar growth. In other words, the US solar market will continue to grow regardless of any tariff adjustment.