U.S. Approves New Tariffs on Solar Cells
On Jan. 22, 2018, U.S. Trade Representative (USTR) Robert Lighthizer announced that the Trump Administration approved recommendations to impose safeguard tariffs on imported solar cells and modules. The USTR made the recommendations to the President based on consultations with the interagency Trade Policy Committee (TPC) in response to findings by the independent, bipartisan U.S. International Trade Commission (ITC) that increased foreign imports of solar cells and modules are a substantial cause of serious injury to domestic manufacturers of photovoltaic (PV) cells.
According to the USTR, the tariffs on foreign imports of solar cells and modules will remain in place for four years. In the first year, a 30 percent tariff on all imported modules and cells will be imposed, a 25 percent tariff will be imposed in the second year, a 20 percent tariff will be imposed in the third year, and a 15 percent tariff will be imposed in the fourth year, before being removed. The first 2.5 gigawatts of imported solar cells will be exempt from the safeguard tariff in each of those four years.
While the tariffs are not specifically leveled on products from any one country, the USTR targeted their comments accompanying the announcement on the implications for China, which has been accused of dumping cheap solar panels into the United States. The trade restrictions arose from industry petitions under Section 201 of the Trade Act of 1974, which allows the government to impose across the board safeguards to counter a flood of imports. Specifically, the safeguard restrictions were in response to two petitions brought by domestic solar companies, Suniva Inc. (who declared bankruptcy in 2017) and SolarWorld Americas Inc.. The USTR found that from 2012 to 2016, the volume of solar generation capacity installed annually in the United States more than tripled, spurred on by artificially low-priced solar cells and modules from China. Due to Chinese state-directed initiatives and subsidies, China's share of global solar cell production skyrocketed from seven percent in 2005 to 61 percent in 2012. China now dominates global supply chain capacity, accounting for nearly 70 percent of total planned global capacity expansions announced in the first half of 2017. China produces 60 percent of the world's solar cells and 71 percent of solar modules.
China and neighbors, including South Korea, may opt to challenge the decision at the World Trade Organization, which has previously rejected prior U.S-imposed tariffs. While the administration has stated that such tariffs will safeguard the domestic solar panel industry, economists warn that the proposed tariffs will result in higher prices for renewable energy developers who have contracted for foreign manufactured solar panels or who will lose access to a competitive market. Experts also fear that the rise in solar panel costs will dramatically increase costs for both rooftop and utility scale solar projects, with such costs being passed on to consumers, slowing a positive growth trend in renewable energy development in the United States.