US import tariffs

Author: Keith Martin Publication | October 2017

US import tariffs on solar panels look more likely after the US International Trade Commission concluded September 22 by a 4-0 vote that US solar panel manufacturers have been injured by increasing solar panel imports.

The commission listened to 10 hours of testimony on October 3 about potential remedies.

It has until November 13 to make recommendations to the president, and the president has another 60 days until January 12 to decide on any relief. Any tariffs would take effect prospectively within 15 days after the decision

The potential tariffs are capped by statute. They cannot increase the cost of imports by more than 50 percent.

Suniva, a bankrupt solar panel manufacturer headquartered in Georgia that asked last April for import tariffs, asked at the October 3 hearing for a tariff of 25¢ a watt on solar cells and 32¢ a watt of panels and a floor price on panels of 74¢ a watt. Suniva is owned 63 percent by Chinese company Shunfeng International Clean Energy.

Suniva said the 32¢ tariff it wants on panels is equivalent to 50 percent of the value of solar panels during the period 2013 through 2015. It is closer to three quarters of the price of panels today.

SolarWorld, another bankrupt solar panel manufacturer that is based in Oregon, but German owned, joined in the tariff request. Instead of a floor price, SolarWorld asked the commission to limit imports in 2018 to 220 megawatts of cells and 5,700 megawatts of panels. Average annual solar panel imports over the last three years have been 8,600 megawatts, according to SEIA. There were 12,800 megawatts in 2016.

The uncertainty caused by the tariff proceeding has left US solar developers uncertain at what price they can offer to supply electricity from new projects. Solar panel prices have increased roughly 40 percent since Suniva asked for tariffs last April. Panels are now selling for prices in the low- to mid-40¢-a-watt range, and the panel supply for 2017 and 2018 projects has largely sold out. Skyrocketing demand for panels in China and India has also contributed to the price increases. One analyst predicted a 19,000-MW market in China for solar panels at the start of this year, but is now predicting demand for 48,000 MWs for 2017 and 41,000 MWs in 2018.

The main parties to the tariff proceeding may be exploring a possible settlement. SEIA proposed using section 1102 of the Trade Agreements Act of 1979 to auction import licenses and use the proceeds to help domestic manufacturers. SEIA suggested a fee equivalent to roughly 1¢ a watt on all imported panels would generate enough funds over a three-year period to cover the adjustment expenses of US panel manufacturers. It said another possible source of funds is the countervailing and anti-dumping duties that are being collected on solar panel imports from China and Taiwan.

Suniva and SolarWorld urged President Trump to issue an executive order requiring solar cells and panels used by federal agencies to be made in America. SolarWorld also suggested that the 30 percent investment tax credit should be extended past the current expiration date for domestically-made cells and panels. However, this would require Congress to act.

The remedies cannot last for more than four years initially, but can be extended for up to another four years. Any remedy that remains in place longer than a year must phase down after the first year.

Roughly a third of imported solar panels come from countries with whom the US has free trade agreements. The trade commission voted separately on whether increasing imports from each of the free trade countries have contributed to the injury suffered by US panel manufacturers and found such injury only in the case of imports from Mexico and Korea, but not other countries such as Canada, Singapore and Australia. The president will consider these findings, but is not required to exempt such countries from any remedies.

GTM Research calculates that a 30¢ tariff with annual step downs would reduce solar capacity additions by 38 percent over four years. Suniva suggested that the 32¢ tariff it wants would drop by 1¢ in each of the next three years after 2018. The trade commission and ultimately the president are free to decide on whatever remedy they consider appropriate.


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Keith  Martin

Keith Martin

Washington, DC