Key Takeaways
U.S. trade officials with the Department of Commerce have finalized steep tariff levels on most solar cells from Malaysia, Cambodia, Thailand, and Vietnam, after U.S. solar manufacturers claimed China was manufacturing them for export to the United States to avoid tariffs that began during the Obama Administration.
Cambodia was the hardest hit, with a tariff of over 3,500%, because it refused to cooperate with the investigation; however, all four nations were found to be exporting Chinese solar products.
An American solar manufacturing trade group claimed the companies in question were dumping panels below cost while distorting markets with government support.
Installers of solar panels in the United States and the companies that have been buying them because of massive subsidies in the Inflation Reduction Act are opposed to the tariffs because they could slow their access to the subsidies and lower their profits.
The tariffs will take effect in June if the International Trade Commission votes to confirm that China’s skirting of tariffs caused material harm to the industry.
U.S. trade officials finalized steep tariff levels on most solar cells from Southeast Asia. U.S. solar manufacturers claim that Chinese companies were undercutting prices and receiving unfair subsidies through factories in Malaysia, Cambodia, Thailand, and Vietnam, which allowed them to avoid tariffs on past imports from China. The United States has had various tariffs in place on Chinese solar panels since the Obama Administration. The American Alliance for Solar Manufacturing Trade Committee accused Chinese-owned producers in these countries of dumping solar panels at prices below cost and distorting the market with government-backed support. The final tariffs issued by the Commerce Department are higher than preliminary rates, with duties varying by company and country and as high as 3,521% in the case of one country. The International Trade Commission is set to vote on whether these imports caused material harm to the U.S. solar industry in June, a key step for final implementation of the tariffs.
Because Cambodian producers did not cooperate with the U.S. investigation, they were provided with tariffs exceeding 3,500%. Jinko Solar’s products from Malaysia have a combined tariff of 41.56%, and Trina Solar’s Thai-made products are subject to a 375.19% tariff. In 2023, over $10 billion in solar products were imported from these targeted countries, making up the majority of the U.S. supply. Following the tariff threat, imports from those nations dropped significantly, while countries like Laos and Indonesia saw an increase in their exports of solar products. Last year, the Biden administration issued preliminary decisions to impose countervailing duties on solar panels and cells produced in four Southeast Asian countries, ranging from 0% to 300%.
The Solar Energy Industries Association trade group was critical of the decision, claiming that tariffs would harm U.S. solar producers because they would raise prices on imported cells that are assembled into panels by American factories.
President Biden’s climate bill, the Democrat-passed Inflation Reduction Act (IRA), gifted solar power with generous and unlimited federal subsidies, increasing utility-scale solar generation to 5% in 2024. The Energy Information Administration’s (EIA) Annual Energy Outlook 2025 expects utility-scale solar generation to grow at an annual rate of 8.8% between 2024 and 2050, reaching 30% of U.S. generation by 2050, based on the outsized subsidies within the IRA and state mandates for renewable energy. The EIA expects the United States to have 854 gigawatts of utility-scale solar capacity installed by 2050, compared to the 128 gigawatts currently in place. The higher tariffs on solar imports, however, could hinder growth in the solar industry and counterbalance the tax credits that solar receives, mainly because China controls some 80% of the supply chain for solar panel parts.
Not only did the IRA provide generous tax credits, but it also provided loans for various green energy projects. The Department of Energy’s Loan Program Office has become a conduit for the “green new scam,” thereby distorting energy markets and destroying grid reliability. Because solar, like wind, is intermittent and driven by weather, it needs favorable regulatory and financial treatment to compete against dispatchable technologies such as coal and natural gas. President Biden and Congress have provided those incentives, which artificially lower the actual cost of building wind and solar power. Not only do the subsidies provide price distortions, but wind and solar are not penalized for their intermittency.
Both technologies must be backed up by reliable technologies that can operate when the sun is not shining and the wind is not blowing. Wind and solar generating prices do not reflect the backup costs from these baseload plants. Furthermore, baseload technologies are disadvantaged because they cannot operate at their full capacity as solar and wind are dispatched first, resulting in their costs being spread over fewer hours of operation and increasing their generating costs. This combination of encouraging more and more intermittent energy with additional costs accruing to the system is contributing to higher utility rates in Europe, California, and in states focused on higher amounts of wind and solar generation.
Conclusion
The U.S. Commerce Department found that some Chinese producers have been shipping solar products through Southeast Asian countries to avoid paying tariffs imposed in the past. The department has slapped high tariffs on four Southeast Asian countries: Malaysia, Cambodia, Thailand, and Vietnam. The tariffs will take effect after the International Trade Commission votes in June on whether these imports caused material harm to the U.S. solar industry. American manufacturers have accused Chinese companies of flooding the market with unfairly cheap goods, initiating a year-long trade investigation by the Commerce Department. The tariffs may help counterbalance the generous subsidies that the solar industry gets from Biden’s climate bill and make the utility market more competitive.
