Biden to delay new solar tariffs in bid to boost industry

President Biden signed an order on Monday that will exempt Southeast Asian nations from any new tariffs on solar panels for two years in an effort to boost the solar industry beleaguered by an ongoing Commerce Department investigation.

The White House said in a fact sheet that Biden would establish a “24-month bridge” for certain solar imports from Cambodia, Malaysia, Thailand and Vietnam by waiving tariffs “in order to ensure the U.S. has access to a sufficient supply of solar modules to meet electricity generation needs while domestic manufacturing scales up.”  

The Commerce Department is currently investigating whether solar panel part companies in Southeast Asia are being used to circumvent U.S. tariffs on Chinese solar companies, a probe that began in March following a complaint from California-based Auxin Solar.

While the investigation is not yet completed, Monday’s action will help ease concerns in the solar sector, which currently relies heavily on imports. The investigation spurred the cancellation of hundreds of solar projects in the U.S. amid concerns that it could result in retroactive tariffs up to 250 percent on imported equipment.

In a proclamation issued later Monday, Biden said that “multiple factors are threatening the ability of the United States to provide sufficient electricity generation to serve expected customer demand” in laying out the decision to order the 24-month pause on new tariffs.

Speaking on a call with reporters, a senior administration official said that Biden was exercising his authority under the Tariff Act and said the action is the result of an interagency legal team.

Biden also invoked the Defense Production Act to expand U.S. manufacturing of solar panel parts, building installation, heat pumps, power grid infrastructure and equipment used to make clean energy-generated fuels, according to the fact sheet. Biden has used the Cold War-era authority in several ways, including ramping up domestic production of baby formula amid a nationwide shortage.

“Together, these actions are going to spur domestic manufacturing, keep spurring it in the way we’ve seen over the first year and a half of this administration,” the senior administration official said. “It’s going to put wind in the sail of construction projects all around the country.” 

Biden’s plans were mostly welcome news to the solar industry. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, issued a statement praising Biden for taking a “thoughtful approach to addressing the current crisis of the paralyzed solar supply chain.”

“The president is providing improved business certainty today while harnessing the power of the Defense Production Act for tomorrow,” she said. “Today’s actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home.”

Still, some companies expressed opposition.  

Samantha Sloan, vice president of policy at panel manufacturer First Solar, said the company is “deeply disappointed” in Biden’s decision, saying it would benefit China.  

“This sends the message that companies can circumvent American laws and that the US government will let them get away with it as long as they’re backed by deep-pocketed political pressure campaigns,” Sloan said.

The ongoing Commerce investigation has triggered debate in Congress, with a bipartisan group of lawmakers arguing that the probe and related tariffs could devastate the domestic solar industry.

One of those lawmakers, Sen. Jacky Rosen (D-Nev.), reacted positively to the White House announcement, arguing it would save solar jobs. 

“The risk of additional tariffs on imported solar panels would have been devastating for American solar projects, the hundreds of thousands of jobs they support, and our nation’s clean energy and climate goals,” Rosen said in a statement. 

Still, some lawmakers have defended the investigation as an important effort to probe the potential circumvention of U.S. tariffs. The Commerce Department concluded following a 2011 investigation that Chinese companies were “dumping” solar cells and products on the U.S. market and as a result imposed hefty tariffs on Chinese solar panel imports. 

Biden has also restricted U.S. imports from a Chinese-based solar firm that officials say is engaged in forced labor practices.

The White House fact sheet released Monday asserted that Biden was “reinforcing his commitment to safeguarding the integrity and independence of all ongoing trade investigations by career officials at the Department of Commerce and recognizing the vital role these processes play in strengthening our economy.”

Lisa Wang, assistant secretary of Commerce for enforcement and compliance, said in a statement Monday that the Commerce probe “continues uninterrupted” and its findings will apply once the 24-month period is over.

“In accordance with the President’s declaration, no solar cells or modules imported from Cambodia, Malaysia, Thailand, and Vietnam will be subject to new antidumping or countervailing duties during the period of the emergency,” Wang said. “Existing duties on Chinese and Taiwanese imports of solar cells and modules remain in effect.”

Updated at 2:48 p.m.