Feds find four Chinese solar panel companies have been evading US tariffs

By Ella Nilsen, CNNUpdated: Fri, 02 Dec 2022 17:47:10 GMTSource: CNNAfter a months-long investigation, US officials have preliminarily determined that four Chinese solar panel companies have been avoi

By Ella Nilsen, CNN

Updated: Fri, 02 Dec 2022 17:47:10 GMT

Source: CNN

After a months-long investigation, US officials have preliminarily determined that four Chinese solar panel companies have been avoiding US tariff laws by routing their operations through other Southeast Asian countries.

The Commerce Department investigation, which launched in March, looked at eight companies that manufacture solar panels and parts in Cambodia, Malaysia, Thailand and Vietnam. The department said Friday that four of them -- BYD Hong Kong, Canadian Solar, Trina and Vina Solar -- should be subject to additional US tariffs.

President Joe Biden in June waived the anti-circumvention tariffs on solar panels for two years, so the changes that result from the investigation won't kick in until June 2024.

The full investigation is expected to be completed in May and could include different findings from the preliminary investigation, according to a senior administration official. The four companies will have to pay additional, steep tariff rates that apply to their Chinese parent companies. Other overseas companies must certify they are not using Chinese-made components or also face steep tariffs in the future.

China has a massive hold on the global supply chain for solar panels and parts -- including in the US -- but there have been allegations of human rights abuses in its manufacturing in addition to trade concerns.

The investigation was launched after one small US-based company, Auxin Solar, filed a complaint in February suggesting that some companies doing business in Southeast Asia might be avoiding tariffs. Auxin CEO Mamun Rashid previously told CNN that the complaint "was existential" for his company.

"When prices of finished panels from Southeast Asia come in below our bill of materials cost, American manufacturers cannot compete," Rashid said, adding that "if foreign producers are circumventing U.S. law and causing harm to U.S. producers like Auxin Solar, it needs to be addressed."

The fact that Commerce even initiated an investigation had a chilling effect across the US solar industry, which ground to halt earlier this year after the investigation was launched. Hundreds of projects were delayed or canceled in the spring, according to an industry survey, and there were fears the probe could have a devastating impact on the solar workforce.

The fallout created a crisis for the Biden administration, which is trying to hasten the transition to clean energy in the US. Biden's top climate officials and top officials in the White House set to work on a strategy to allow solar panels and parts from Southeast Asia to continue to be shipped to the US, while letting Commerce carry out its investigation independently.

A senior administration official stressed on Friday that there are no import bans in place, adding that tariff orders on Chinese solar companies have been in place since 2012.

"Solar installers have 18 months to find new suppliers who are willing and able to show that they're complying with American trade laws," the official said.

US manufacturers cheered the investigation's findings.

"While immediate relief for domestic solar manufacturers would be ideal, at the very least there will be duties imposed in the near future," Alliance for American Manufacturing President Scott Paul said in a statement. "In the meantime, installers, solar manufacturers, and the federal government must turbocharge efforts to build up domestic capacity. The United States shouldn't depend on dumped, subsidized, circumvented, or forced labor-made imports to build our solar energy future."

But the national solar trade association expressed disappointment.

"The only good news here is that Commerce didn't target all imports from the subject countries," Solar Energy Industries Association President Abigail Ross Hopper said in a statement. "Nonetheless, this decision will strand billions of dollars' worth of American clean energy investments and result in the significant loss of good-paying, American, clean energy jobs."

Ross Hopper said the clock is ticking on the two-year window, and while the solar industry is working to move its supply chain away from Asia and to the US with the help of the new climate law, it will take years to complete.

"Two years is simply not enough time to establish manufacturing supply chains that will meet U.S. solar demand," she said.