Date: Monday, August 2nd, 2021
Source: The Wall Street Journal
WASHINGTON—Two small U.S. solar companies plan to petition the government to extend tariffs on solar cell and panel imports, reigniting a fight that has split the industry—and one that could force the White House to choose sides.
Auxin Solar Inc., a San Jose, Calif., solar panel manufacturer, and Suniva Inc., which owns an idled solar cell factory in Norcross, Ga., plan to ask the U.S. International Trade Commission on Monday to extend the solar tariffs for four years, said Mamun Rashid, Auxin’s chief executive officer.
The 18% tariffs were imposed in 2018, and are set to expire next year. They largely affect imports from Chinese-owned companies. China is the world’s largest producer of solar cells and panels used to generate electricity, although it has moved some of its production to elsewhere in Asia to avoid U.S. tariffs.
The companies say extending the tariffs is necessary to “secure America’s solar energy independence” and to “rid the solar supply chain of injurious and unfair trade practices” that hurt American workers, according to a copy of the petition.
“It’s a national-security concern,” Mr. Rashid said.
Chinese firms say they are privately owned and have prospered through scale and innovation.
Filing the petition triggers a monthslong review by the ITC, a quasi-judicial federal agency that will seek to determine whether the industry has made a “positive adjustment” to import competition during the first four years of the tariffs and needs more time to regain its footing.
The ITC can recommend extending the tariffs, but only the president has the power to do so—creating a potential dilemma for the Biden White House, which wants to encourage domestic manufacturing and wants to speed up the adoption of solar technology.
Tariffs provide an incentive for domestic manufacturing of solar panels—an industry that has been eviscerated by cut-rate Chinese competition.
But they also raise the cost of solar panels to business and residential customers, potentially slowing the spread of the clean technology.
“It is time to end the job-killing Section 201 solar tariffs,” said John Smirnow, general counsel for Solar Energy Industries Association, a trade group whose membership includes importers and installers. “They are a multibillion-dollar drag on industry growth.”
The tariffs–known as section 201 tariffs—were put in place by President Donald Trump in 2018. Initially 30% and later cut to 18%, they applied to imports of solar panels and solar cells from all but a few dozen impoverished nations.
Since the tariffs were imposed, solar-panel production in the U.S. has tripled. A Chinese company and a Korean company set up factories in the U.S., and an American firm, First Solar Inc., expanded domestic production.
Auxin says that the tariffs have helped it stay in business and expand production capacity somewhat. But it says it needs a new round of tariffs to expand further, including to start producing the silicon wafers used to make solar cells, which turn sunlight into electricity.
Suniva halted solar cell production in 2016 and says it plans to restart its solar-cell factory if the tariffs are extended.
In April, U.S. Trade Representative Katherine Tai indicated sympathy for the tariffs.
“The issue of the solar tariffs are very much on my mind,” she said at a Senate hearing. “We are struggling with the application of these tariffs that are meant to save maybe the last producer that we have here in the United States.”
A spokesman for the U.S. trade representative declined to comment on her current views of the tariffs.
There are other efforts under way in Washington to help domestic solar manufacturing.
The White House is looking to shape Buy American rules to favor purchase of panels made domestically. In Congress, several lawmakers are working on legislation to create tax incentives for domestic solar manufacturers.
Mr. Rashid, the Auxin CEO, said he supports the tax plans but also needs tariffs so he can count on being protected somewhat from import pressure.
“We are afraid to make investments because we don’t know if the tariffs will last,” he said.
The section 201 tariffs are the latest in a series of trade efforts by the U.S. intended to help a domestic industry that has been battered by Chinese competition. Until about 2000, China was a small outlier in a global solar industry dominated by Germany and Japan. Some U.S. companies also played an important role.
Around that time, different local Chinese governments started to provide substantial backing to solar entrepreneurs, creating global oversupply and a sharp decline in prices. By 2011 Chinese manufacturers dominated the solar-panel industry, with about 60% of global sales.
The U.S. responded with a series of tariffs to block cheap imports. Chinese manufacturers largely evaded the initial tariffs by setting up factories in countries not covered by the policy and exporting from there to the U.S.
Section 201 tariffs are designed to give greater protection because they are applied to nearly everywhere in the world.
But Auxin and Suniva contend that their impact was blunted, in part, because the Trump administration weakened the tariffs in 2019 by providing exemptions for many imported solar panels. Mr. Trump ended the exemption shortly before he left office.