Biden halts new tariffs on solar energy as White House seeks to boost adoption

WASHINGTON – The Biden administration on Monday announced a two-year pause to impose any new tariffs on the solar energy industry, a decision that follows Cry from importers Those who have complained about the tariffs threaten wider adoption of solar energy in the United States.

The move is considered a victory for domestic solar installers, who have said that Tariffs are at risk The Biden administration’s goal is to drastically reduce carbon emissions by the end of the decade by reducing the flow of products into the United States. But it goes against the wishes of some US solar manufacturers and their advocates, who have been pressing the administration to erect stricter barriers on cheap imports to help revive the domestic industry.

This was the latest example of President Biden’s presence Stuck between competing impulses When it comes to trying to steer the United States away from global warming fossil fuels, he has vowed. By reducing tariffs, Biden will ensure an adequate and cheap supply of solar panels at a time of rising inflation and trying to get stalled solar projects back on track. But the decision will delay other White House efforts that might have punished Chinese companies for their trade abuses and diminished Beijing’s role in global supply chains.

To address complaints from the domestic solar industry, the administration said Biden will try to speed up US manufacturing of solar components, including by invoking the powers of the Defense Production Act, which gives the president expanded powers and funding to direct the activities of private companies.

The possibility of additional tariffs stems from an ongoing investigation by the Ministry of Commerce, which is looking into whether Chinese solar companies – which are already subject to tariffs – have attempted to circumvent those duties by Moving their operations out of China to Southeast Asia.

Auxin Solar, a small California-based solar panel manufacturer, requested the inquiry examining imports from Vietnam, Malaysia, Thailand and Cambodia.

In 2020, 89 percent of the solar modules used in the United States were imported, and Southeast Asian countries were responsible for the bulk of the shipments.

If the Commerce Department determines that factories were set up to circumvent U.S. tariffs, the department can retroactively impose tariffs on shipments to the United States. But under the tariff “pause” that Biden ordered on Monday, such tariffs cannot be imposed for the next two years.

The decision is the latest twist in a long game of deceptive strikes the US government has played against low-priced imports into the solar industry.

While US companies were among the first to introduce solar technology, China has dominated global solar manufacturing in recent decades by subsidizing production and creating a vibrant domestic market for solar installation. In 2011, the United States imposed duties on Chinese products to counteract unfairly low prices and subsidies. Then US installers started buying more products from Taiwan, but in 2015 the US imposed duties on Taiwan as well.

Trade experts said stopping tariffs could undermine trade laws meant to protect American workers by allowing companies in China to continue flooding the United States with cheap imports.

On Monday, Auxin CEO Mamoun Rashid said President Biden was interfering with the investigation.

“By taking this unprecedented – and potentially illegal – action, he has opened the door wide for China-funded special interests to defeat the fair application of US trade law,” Mr. Rashid said in a statement.

To stop the tariffs, a Biden administration official said the administration is invoking a section of the Tariff Act of 1930, which allows the president to suspend certain import duties to address an emergency. Commerce Department officials said their investigation will continue and that any tariffs resulting from their findings will begin after the 24-month hiatus ends.

“The president’s emergency declaration ensures American families have access to reliable and clean electricity while ensuring that we have the ability to hold our trading partners accountable for their obligations,” Commerce Secretary Gina Raimondo said in a statement.

The prospect of tariffs has sparked an ugly battle in recent months over the future of the US solar industry.

US solar companies said the prospect of more tariffs – and retroactively – was already having a negative impact on imports. Groups like the Solar Energy Industries Association, whose membership includes several Chinese manufacturers with US operations, are lobbying the White House against the tariffs and on Monday welcomed the news that the administration would halt any new tariffs.

“Today’s actions protect existing solar jobs, increase employment in the solar industry and strengthen a strong solar manufacturing base here at home,” Abigail Ross Huber, SEIA President and CEO, said in an emailed statement.

“During the two-year tariff suspension window, the US solar industry could return to rapid expansion while the Defense Production Act helps grow US solar manufacturing,” she said.

Companies that rely on imported products — and US officials prioritizing the transition to solar power — are complaining that the Commerce Department’s investigation has added uncertainty to future prices for the solar market, slowing the transition away from fossil fuels. NextEra Energy, one of the country’s largest renewable energy companies, said it expects to delay the installation of between 2 and 3 gigawatts of solar capacity and construction of storage units – enough to power more than a million homes.

“In the past two months, we’ve had to pause all construction efforts,” said Scott Buckley, president of Green Lantern Solar, a Vermont-based solar installer. Mr. Buckley said his company had to put about 10 projects on hold, which would have resulted in the installation of about 50 acres of solar panels.

Mr. Buckley said there is no easy solution to the country’s dependence on imported products in the short term and that White House actions on Monday will allow companies like him to resume installations this year.

“This is back to work,” he said. “This is how I think about it. Let’s clear the stalemate.”

But domestic solar producers and US labor unions said the recent surge in imports from Chinese companies manufacturing in Southeast Asia clearly violated US Trade Act, which prohibits companies from trying to avoid US tariffs by shifting production or assembling one product to another. country.

Domestic producers have accused importers – who have close trading ties to China – of exaggerating the hardships of their industry to try to influence the Biden administration and preserve profit margins generated by unfairly priced imports.

“If you have a supply chain that relies on flooded and subsidized imports, you are going to have a problem with your supply chain,” said Scott Ball, president of the Alliance for American Manufacturing.

“We depend on hostile countries that don’t have enough domestic production to ensure that prices and supply shocks don’t go up,” said Michael Stomo, CEO of the Coalition for a Prosperous America, a nonprofit group that promotes domestic manufacturing. “Whether it’s medicine, PPE, or solar panels, you have to have local production.”

Some critics have also argued that the legal rationale for the White House’s moves was misleading, arguing that the administration was effectively declaring a state of emergency due to the consequences of its own trade laws.

Scott Linkecum, a trade policy expert at the Cato Institute, a libertarian think tank, said the administration’s actions appeared to be an “extension of the platform.”

The provision of the Commerce Act that Biden invoked allows the president to “declare the existence of an emergency due to a state of war or otherwise,” and during that emergency to import “food, clothing, medicine, surgical, and other supplies for use in emergency relief work” duty-free.

He said critics of US tariffs have long proposed a “public interest” test that would allow tariffs to be raised to mitigate broader economic damage, but Congress has not approved such a measure.

In a letter late last month, Senators Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, complained that solar energy importers had spent “millions of dollars on advertising and lobbying to induce political interference in the trade enforcement process.” Biden administration officials had previously said the Commerce Department investigation was immune to political interference, calling it “quasi-judicial” and “apolitical.”

Tariffs on solar energy have been a source of controversy for decades, but they have gained renewed importance in recent years as the consequences of climate change have become more apparent. Chinese companies have expanded internationally, allowing them to continue shipping products to the United States, while American companies struggle to compete.

The global solar industry’s dependence on China has been Held the Biden administration’s efforts To ban products linked to forced labor in Xinjiang, the northwest region where US officials say Chinese authorities have detained more than 1 million Uyghurs and other minorities. Xinjiang main product Polysilicon, the raw material for solar panels.

Solar importers complained about it Ban last year Over forced labor solar raw materials by Hoshine Silicon Industry have temporarily halted multibillion-dollar US projects, as companies struggle to provide documentation to customs officials to prove that neither they nor their suppliers are sourcing materials from Hoshine.

After Russia’s invasion of Ukraine in February, high gasoline prices also hampered a broader desire to push the country away from oil and left Biden asking oil-producing countries in the Middle East and beyond to ramp up production.

White House officials said Monday that Mr. Biden will sign a set of guidelines aimed at increasing domestic development of low-emission energy technologies. It’s set to make it easier for local suppliers to sell solar energy systems to the federal government. The administration said in a fact sheet that it would order the Department of Energy to use the Defense Production Act to “rapidly expand American manufacturing” of solar panel parts, building insulation, heat pumps, power grid infrastructure and fuel cells.