President Trump Imposes Tariffs on Imported Solar Modules and Cells
Suniva Injury Finding Announced: Solar Import Remedies Heading to a Political Decision

President Trump Imposes Tariffs on Imported Solar Modules and Cells

By Stacy Ettinger and James Wrathall

President Trump announced the imposition of tariffs on imported crystalline silicon photovoltaic (“CSPV”) modules and cells, as previously recommended by the U.S. International Trade Commission.  The tariffs will be effective February 7, 2018.

Importers will be required to pay a tariff in the amount of 30 percent of the entered value in the first year, declining by 5 percent a year in each of the second, third, and fourth years.  With respect to CSPV solar cells, the first 2.5 gigawatts imported in each year will be exempted from the tariff.  These tariffs are in addition to the antidumping and countervailing duties relief previously imposed by the U.S. Department of Commerce on Chinese solar imports.

For U.S. solar developers and installers, the initial 30 percent tariff is expected to add 10 to 15 cents per watt to the final installed price.  Green Tech Media Research (“GTM”) has predicted this will cause a reduction of approximately 10 percent in U.S. installed solar capacity.  The tariffs do not apply to technologies other than CSPV, specifically thin film modules.  Therefore manufacturers of thin film products such as Solar Frontier and First Solar may see increased relative market share.

The biggest impacts on projects are expected in the utility-scale solar sector, which is largely dependent on being competitive with other generation sources.  Residential solar is viewed as more resilient and less sensitive to price changes.

Some CSPV manufacturing might shift to free trade agreement countries not included in the injury finding.  In particular, manufacturers based in Singapore or Canada may benefit, if the President’s proclamation reflects the approach taken by a majority of the ITC Commissioners to exclude these countries from the tariff program.

China, South Korea, and other countries with exports subject to the tariffs will likely file complaints before the World Trade Organization (“WTO”).  It is unclear what position the current Administration would take in response to an adverse WTO decision, if any. In any case, the WTO dispute settlement process itself could take anywhere from two to four years to complete.

Companies should consider steps to mitigate impacts of these tariffs.  Reportedly over two gigawatts of modules have already been procured for 2018 projects in the United States.  Accessing stockpiles of solar equipment may aid in reducing economic impacts.

The formal proclamation signed today by President Trump provides for exclusion of particular products from the safeguard measure. Procedures for requests for exclusion will be published in the Federal Register within 30 days.  Companies may want to review the product exclusion process and consider whether an exclusion request is warranted.


Suniva Injury Finding Announced: Solar Import Remedies Heading to a Political Decision

In response to a petition by bankrupt U.S. solar panel manufacturer Suniva Inc., today the U.S. International Trade Commission (“ITC”) issued a finding that low-cost solar panel imports have caused “serious injury” to the domestic manufacturing sector.

It is widely believed that trade sanctions from this decision could cause price increases on the most commonly used type of solar panels, and therefore significant harm to the U.S. solar industry and corporate energy consumers.  By early November, the ITC will recommend a remedy, which will go to the White House for a final decision within three months.

The ITC’s injury finding generally applies to solar panel imports from all countries.  However, the ITC also is required to separately consider whether imports from countries with which the U.S. has a Free Trade Agreement (“FTA”) account for a substantial share of total imports and are contributing “importantly” to the serious injury.  In this case, the ITC made affirmative injury findings for imports from FTA countries Mexico and Korea, which will be included in the determination of remedies. The ITC made negative findings with respect to the other FTA countries, including Canada, which therefore will not be subject to such remedies.

The stakes are high.  Industry experts have said that by increasing the cost of panels, the tariffs sought by Suniva could have a negative impact of more than $50 billion on the U.S. solar industry.  More than 88,000 jobs in the solar supply chain could be eliminated, and 47 gigawatts of solar installations could be cancelled in the next five years.  Major corporate energy consumers relying on solar to meet sustainability commitments could see costs of installed utility-scale projects more than double.  It is unclear whether raising tariffs, especially to levels requested by Suniva, would significantly boost domestic panel manufacturing or create new jobs.

The ITC remedy recommendations will go to the White House, which has authority to impose whatever remedies President Trump chooses.  There is opposition to tariffs across the political spectrum, with commenters ranging from The Wall Street Journal and the Heritage Foundation on the right to the Solar Energy Industries Association (SEIA), environmental groups, and labor unions on the left, all arguing that imposing tariffs would harm U.S. economic interests.  Despite this broad opposition, the solar industry is very concerned that President Trump may view tariffs favorably as appearing to make a strong statement in favor of U.S. manufacturing and against Chinese trade imbalance.

The outcome of the remedy may be heavily influenced by political calculations.  SEIA and a number of industry coalitions will respond to the ITC decision with vigorous political advocacy, making the case to the White House and Congress that tariffs on solar panel imports would be counterproductive.  Another group, the American Solar Jobs Coalition, is working to build a path forward that “will support all aspects of the U.S. solar industry and ensure that the President’s decision will allow the solar industry to continue to support American businesses and drive American prosperity.”  Companies in the solar sector and clean energy consumers should actively monitor the outcome of this matter, and consider strategic responses in the event significant trade sanctions are imposed.

For more information on the Suniva proceeding, contact Elias Hinckley, Stacy Ettinger, or Jim Wrathall of K&L Gates.

Elias B. Hinckley

Stacy J. Ettinger

James R. Wrathall

Copyright © 2024, K&L Gates LLP. All Rights Reserved.