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Home›Made to Measure Tariff›Here’s how another U.S. protectionist move could backfire on the U.S. solar industry

Here’s how another U.S. protectionist move could backfire on the U.S. solar industry

By Guadalupe Luera
April 5, 2022
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The U.S. Department of Commerce (DOC) is investigating whether Southeast Asian solar cell makers are using parts made in China that would normally be subject to a tariff. In a survey released today, most players in the U.S. solar industry said the DOC investigation will devastate their businesses because they depend on imports of solar modules to meet growing demand.

Trying to help America’s solar industry, but hurt it instead

The DOC’s investigation into the assembly of crystalline silicon photovoltaic (CSPV) cells in four Southeast Asian countries could take up to a year, and suppliers have indicated they may stop shipments of these country to the United States until a final decision is made.

Auxin Solar, a California-based solar panel maker whose website says it is the “longest-running CSPV producer in the United States,” asked the U.S. Department of Commerce in February to conduct an anti-dumping circumvention investigation. on solar cells from Cambodia, Malaysia, Thailand and Vietnam.

Auxin says tariffs on solar imports would boost domestic manufacturing. But the majority of U.S. solar companies, as well as the Solar Energy Industries Association (SEIA), oppose the investigation because the U.S. depends on imports of solar modules to meet growing demand.

SEIA has therefore launched a survey of solar companies to measure the impact of the DOC investigation on their activities.

As of 8 a.m. ET today, 74% of the 200 companies surveyed said their panel deliveries had already been canceled or delayed. According to SEIA, 84% of all U.S. solar modules
imports come from all four countries under investigation, and non-Chinese capacity elsewhere is insufficient to profitably meet US demand.

In addition, all solar companies surveyed foresee damage across the value chain, and 100% of domestic manufacturers in particular expect the Southeast Asia investigation to have serious or devastating effects.

The findings of this survey come as the industry faces unprecedented supply chain challenges and price increases. In 2021, solar equipment costs rose 18% and the threat of earlier trade actions led to project delays and cancellations, according to a report by SEIA and Wood Mackenzie.

A later report by Wood Mackenzie found that bypass petitions could eliminate 16 gigawatts of panels from the US supply chain, or two-thirds of all panels installed by the United States in 2021.

SEIA estimates that as a result of this petition, the solar industry will lose 70,000 of its 231,000 jobs.

Abigail Ross Hopper, President and CEO of SEIA, said in an emailed statement today:

We urge the administration to expedite this investigation and end this unnecessary impediment to our clean energy future.

We have said that tariffs are the wrong way to encourage manufacturing and that it will take time and political commitment to move manufacturing to the United States on the scale needed.

The countries named in the petition have been reliable trading partners, and we need their products, at least in the short term, as we fight to establish a sustained and powerful manufacturing presence here in America.

Electrek’s Grasp

This DOC investigation is well-intentioned and poorly executed. A U.S. tariff on goods made abroad will do no good if enough of those goods to meet demand are not made domestically.

It’s great that Auxin Solar makes CSPV cells, but can it do enough for every solar company in the US that needs it?

US manufacturing of solar cells and panels is to be launched, but this is a major and important operation that will take years to set up.

And as a result, the much-needed growth of the solar industry could come to an abrupt halt, and everyone would lose.

The Biden administration must reconsider this investigation as it shoots its own climate change goals in the foot and crushes the vital solar industry.

Read more: Wind, solar and electric vehicles can prevent catastrophic climate change, says new IPCC report


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