Commerce Department Announces Small Tariffs On Chinese Solar Panels

After months of speculation and debate about unfair Chinese subsidies to domestic solar manufacturers, the U.S. solar industry finally has an answer to one piece of the ongoing trade case: Solar panels imported from China will be hit with a small tariff.

The Department of Commerce issued a preliminary decision today based upon the agency’s impartial review of Chinese subsidies to domestic solar companies.

The tariffs range from 2.9 percent to 4.73 percent — dramatically lower than the 20 percent expected by many industry analysts. It is important to note, however, that today’s decision from Commerce is the first of two key tariff rulings: subsidies and dumping. The second decision on whether Chinese companies are dumping panels into the U.S. market below cost is expected in May.

The complaint was filed in October by SolarWorld and a small group of unnamed solar manufacturers that called themselves the Coalition of American Solar Manufacturers, or CASM. It sparked a contentious debate in the solar industry between upstream panel manufacturers getting squeezed by rapidly falling prices and downstream developers benefiting from cheap equipment.

The Center for American Progress has taken a nuanced stance on the issue — understanding the value of falling solar prices and free trade, but also supporting trade enforcement mechanisms when needed. Melanie Hart, CAP’s China Energy and Climate Policy Analyst, explained the importance of the case in a statement:

Today’s Commerce Department decision to levy import tariffs on Chinese solar panels is a positive step forward in a much larger effort to level the clean energy playing field between the United States and China. I applaud SolarWorld for pursuing this case and utilizing the trade institutions designed to address these types of complaints. Too many U.S. companies avoid filing trade petitions because they fear Chinese government retaliation. When U.S. companies allow those fears to prevail, the end result is tacit accommodation to illegal trade behavior, and that can erode U.S. competitiveness and drive entire U.S. industries out of business.

This countervailing duty (subsidy) tariff is lower than many industry analysts expected. It is important to note, however, that in trade cases where subsidy and dumping petitions are filed in tandem, the dumping tariff is generally the higher import duty. The Commerce Department is expected to issue the SolarWorld dumping determination in May. At this point it is far from clear what the end result of this case will be and how it will impact manufacturers in the United States and China.

One thing that we can say based on this relatively low subsidies tariff is that the Commerce Department did not apply punitive duties in this ruling. Instead, the Commerce Department based this decision on its own review of the evidence and only levied tariffs based on what it could prove. Chinese companies and officials are watching this case very closely, and hopefully this action will serve as an example in China for how these cases can and should be handled impartially and according to law.

The United States and China are the world’s biggest energy consumers. Keeping our borders open to allow and encourage clean energy trade can stimulate competition, speed innovation, and bring down costs to speed our transition toward a clean energy economy. To be equally beneficial for both countries, however, it is critical that U.S. and Chinese companies compete on a level playing field. At present, it is clear that the field is often far from level. Allowing and encouraging U.S. companies to file trade petitions such as this one is critical for correcting that imbalance.

Representing the other side of the issue, Jigar Shah of the Coalition for Affordable Solar Energy (CASE) issued a moderately positive response to the low tariffs. CASE has been openly critical of SolarWorld and the CASM companies, saying the alliance is potentially throwing economic roadblocks in front of the industry:

Today’s preliminary determination by the Department of Commerce imposing low tariffs on imported solar cells and modules is a relatively positive outcome for the U.S. solar industry and its 100,000 employees. However, tariffs large or small will hurt American jobs and prolong our world’s reliance on fossil fuels. Fortunately, this decision will not significantly raise solar prices in the United States as SolarWorld has sought.

This decision clearly demonstrates that the Commerce Department did not find the Chinese government engaged in massive subsidization, as SolarWorld and CASM claim.

There is more work to be done to protect the future of solar industry and power in America. There will be another decision in May when the Commerce Department announces anti-dumping duties. A recent study by the Brattle Group confirmed that placing artificially high tariffs on solar panels would severely undermine the US solar industry, resulting in the loss of up to 60,000 US jobs by 2014.

CASM countered those job loss claims with its own report earlier this month showing that America’s 2010 solar trade surplus with China turned into a gaping $1.6 billion deficit last year.

With so much at stake for both sides of the rapidly growing solar sector, the war of words between manufacturers and developers will likely continue well into the spring.

Related Post:

9 Responses to Commerce Department Announces Small Tariffs On Chinese Solar Panels

  1. Merrelyn Emery says:

    Talk of a ‘level playing field’ in this matter is a nonsense. The USA has had a highly industrialized base for decades and could have flooded the world with cheap innovative solar. It has chosen not to do so.

    Now that China has taken the lead, the US is crying ‘foul’. Isn’t it about time that we all put the future of the planet above the dogma of ‘the market’? The market had its chance and failed us all once again – too bad! ME

  2. Raul M. says:

    it is a confusing article with little to report of the monies raised from the Chinese manufactures. I think the audience is to just be happy that with rising costs that buyers won’t automatically go to Chinese solar panels.
    Certainly substance could be included in an analysis.

  3. nyc-tornado-10 says:

    How much does china subsidise the cost of solar panels? how much of a difference would it make per watt of panel?

    I recently bought 2 of these panels that matched those used on my system, and i am glad to have the extra output. If i were buying a new system, i would get sunpower panels, which is them most efficient panel, and not made in china.

  4. kafantaris says:

    This is a stupid move.
    For all that matters, the Chinese can give us the solar panels for free. In the end, we are the ones who will get the benefit, since we are the ones who will end up the cheaper solar energy.
    Why are we fighting it then?
    Erecting barriers against cheap solar panels — no matter who makes them — directly translates to erecting barriers against cheap renewable energy.
    Imposing such obstacles at time of high energy prices is utter foolishness.

  5. Tom King says:

    Every panel is a deflector shield resisting the attack on our planetary vessel.

  6. Sasparilla says:

    Frankly this level of tariff on the Chinese panels is basically nothing – this was a show tariff – it looks like we’re doing something but in reality its not altering the dumping a bit.

    I saw that the DOE had recently taken down the page where they showed the level of financial support the Chinese government gave to their panel makers in 2010 and thought that was a bad sign (political tampering by the administration probably), obviously it was. For reference the Chinese government gave $37 billion in direct financial aid to their industry in one year 2010 ($7 billion to one company alone) – the US loaned $1.4 billion to the US industry over several years most of it being the stimulus package. This isn’t what the Germans would do with their industry.

    Its rather sad looking at all the ends justify the means responses. So what if they dump the US solar cell industry into bankruptcy and we depend on the Chinese for solar power in the future – they give us cheap panels – for the moment.

    Anyone thinking that should look at what the Chinese did to the world Rare Earths (elements) industry (your hybrid, EV, cell phone etc. needs them) – they dumped everyone else in the world out of the market (the US was the biggest player) then a few years later raised prices by an order of magnitude for exports (but did not raise the price if you made your gadget in China).

    I wonder if these folks wanting these cheap panels would still want them if we have to also allow the Chinese to send their workers here to install them 10 years into the future (to get the cheap prices)? The Chinese sometimes do that for projects in foreign countries on projects they do where they have the leverage – i.e. insist they bring their own labor.

    This, like the rare earths industry, was an industry that the Chinese government identified several years ago as an industry of the future and funded / guided their companies to own this market.

    Here’s some nice graphs for those that are interested:

    Here’s a good page explaining the situation for the US industry:

  7. Sasparilla says:

    “How much does china subsidise the cost of solar panels?”

    The US Department of Energy had estimated that the Chinese government gave $37 billion in direct funding to the Chinese panel industry in 2010 alone (just 1 year). This funded the construction of massive panel factories where the Chinese market only consumes a tiny part of the yearly output – most of the output goes to the US market which isn’t protected. US industry got $1.4 billion in loans since 2008 (most of it in the stimulus package).

    The Chinese exported ~5000 panels to the US in 2008, ~15,000 in 2010 and more than 70,000 in 2011. Unless stopped they will dump the US out of the market as they did with the rare earths industry.

    Price per watt has gone from $4 watt in 2008 to ~$1.15 watt in 2011. As others have pointed out that last dollar (about $1 per watt) is what happened in 2011 when their imports went through the roof.

  8. Raul M. says:

    Sorry I don’t have ritchous indignation about people trying to put more solar panels on the roofs.
    Maybe the US could try to put some more on the roofs.
    Besides I thought tariffs wore thought of as something for commodities that were not really needed but people want anyway. Don’t know how such concept goes with fact of warming.

  9. Excellent post! You have a balanced and accoutnable perspective. Unfortunate to note the politically motivated subsidies only increase the cost of energy for everyone.