U.S. Imposes Much Stiffer Tariffs on Chinese Solar Manufacturers

The U.S. Commerce Department, acting in response to the case brought by seven American photovoltaics makers, imposed a second round of tariffs on Chinese manufacturers that are much tougher than the ones previously levied. The new anti-dumping tariff on products exported to the United States by China's Suntech Power Holdings Co. is 31.22 percent; Trina Ltd. faces a 31.14 percent levy; and for 59 other firms, it will be 31.18 percent. In March, the Commerce Department imposed anti-subsidy tariffs on Chinese PV companies ranging from 2.9 to 4.73 percent, so that together, the penalties on China's solar exporters will now be in the vicinity of 35 percent—a hefty bite.

Greentech Media Research analyst Shyam Mehta points out that there are ways Chinese exporters can evade the tariffs, but the alternatives are not cost-free either. "Broadly speaking, [the Chinese PV makers] have two strategies: set up cell manufacturing outside China, or use the tolling services of Taiwan-based suppliers to turn wafers into cells there, and then assemble the modules in China." One way or another, the cost of installing photovoltaics in the United States will rise.

Naturally, the U.S. solar community is sharply divided between project developers and consumers, who want lower module prices, and domestic manufacturers, who have been getting killed by their Chinese competitors. The greentech/clean tech lobbies are divided along the same lines. And so, for that matter, is the country as a whole, which is torn between anger at perceived Chinese trade tactics and fear of igniting an all-out trade war.

The foundation for the Commerce Department decisions was a unanimous finding by the U.S. Trade Commission in December that "U.S. industry is materially injured by reason of imports of crystalline silicon photovoltaic cells and modules from China that are allegedly subsidized and sold in the United States at less than fair value."

There is bound to be some Chinese backlash, as Keith Bradsher and Diane Cardwell point out in today's New York Times. "The American decision was made by civil servants in a quasi-judicial process that is heavily insulated by law from political interference, and does not represent a deliberate attempt by the Obama administration to confront China on trade policy. But that distinction has been largely lost in China, where the solar panel issue has been one of many causes embraced online by the country’s vociferous ultranationalists, who put heavy pressure on Chinese officials to respond forcefully to perceived snubs to China."

As the solar dispute has escalated, China has threatened to take steps such as imposing a counter-tariff on U.S. polysilicon producers, who benefit from inexpensive hydroelectricity in Tennessee and Washington state. So, if China's hard-nosed communistic capitalists do just that, blame it on Franklin Roosevelt's socialistic Tennessee Valley Authority and his Grand Coulee Dam, celebrated in song by Woody Guthrie.

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