The U.S. government is considering announcing new tariffs on solar products from Malaysia, Vietnam, Thailand, and Cambodia in an effort to combat Chinese companies in these Southeast Asian countries receiving cross-border subsidies from the Chinese Communist Party.
According to Reuters, the U.S. Department of Commerce is expected to release an announcement on Tuesday regarding the imposition of new tariffs on the four Southeast Asian countries. This decision comes after the Commerce Department initiated a trade case earlier this year and conducted investigations, with this being the first of two initial determinations.
In April 24, a coalition called the American Alliance for Solar Manufacturing Trade Committee, comprised of U.S. solar manufacturers, submitted a request to the U.S. International Trade Commission and the U.S. Department of Commerce, citing a record surge in imports of solar components related to China from these four Southeast Asian countries. They believe this has harmed the U.S. solar industry and are calling on the Biden administration to impose new penalties on solar components coming from these nations.
The alliance consists of seven companies, including Qcells from Hanwha Solutions in South Korea, First Solar from Arizona, and Meyer Burger, one of the largest solar panel manufacturers in Europe.
In a statement, the alliance mentioned plans to create tens of thousands of high-paying, long-term job opportunities for the U.S. economy in the coming years. They are urging the U.S. government to uphold fair competition to protect billions of dollars in investments in the domestic solar manufacturing industry.
Leading companies in the solar manufacturing sector allege that manufacturers in Malaysia, Cambodia, Thailand, and Vietnam may be engaging in illegal activities. They suspect that Chinese companies with operations in these four countries are attempting to evade existing U.S. tariffs on Chinese solar products by shifting their supply chains to these nations. These companies, they argue, affiliated with China, are selling solar panels in the U.S. market at prices below production costs, with imports from these four countries totaling a record-breaking $12.5 billion last year, resulting in over a 50% drop in product prices and posing a threat to U.S. companies.
According to data from S&P Global Market Intelligence, the four countries accounted for 84% of U.S. solar panel imports in the fourth quarter of 2023.
The alliance accuses Chinese manufacturers operating in these four Southeast Asian countries of not only benefiting from low-cost materials and components subsidies from the Chinese government but also receiving support through China’s Belt and Road Initiative. These Chinese companies also receive subsidies in the form of cheap financing, electricity, production land, and tax exemptions from local governments.
Reports suggest that this is the first time the Department of Commerce is considering the impact of cross-border subsidies, which were previously prohibited in anti-subsidy tariffs. However, a new final rule that came into effect on April 24 in the U.S. updated the enforcement and management of anti-dumping and countervailing duty laws, allowing the Department of Commerce to consider cross-border subsidies in investigations, meaning subsidies obtained by enterprises from China can be factored in.
The preliminary ruling on the anti-dumping investigation request made by the alliance is expected to be issued in November. Countervailing duties are often lower than anti-dumping duties, with the latter aiming to prevent foreign producers from selling products below market prices.
In August, Bloomberg reported that some U.S. companies are lobbying the government to increase tariffs on solar panels imported from Malaysia, Thailand, Cambodia, and other Southeast Asian countries to 272%.
Two years ago, in response to requests from U.S. project developers, Biden temporarily waived a 14.25% import tariff on solar products from Malaysia, Thailand, Cambodia, and Vietnam, as U.S. developers relied on cheap imported products to enhance the competitive costs of their facilities. This exemption expired on June 6.
According to mainland media reports, some Chinese solar manufacturers have relocated factories to countries like Indonesia and Laos, which are currently not on the U.S. tariff list.