Biden Extends Trump’s Solar Tariffs With Key Exemption

Source: By Justin Sink, Bloomberg • Posted: Sunday, February 6, 2022

Tariffs had been scheduled to expire in early February Biden trying to balance local output, renewables goals

Contractors install solar panels on a new home in Sacramento, California, U.S.
Contractors install solar panels on a new home in Sacramento, California, U.S. Photographer: David Paul Morris/Bloomberg

President Joe Biden is extending tariffs on imported solar equipment but leaving in place a critical exemption, attempting a middle-ground approach that could boost domestic manufacturing as well as U.S. renewable-energy deployment.

The tariffs had been scheduled to expire in early February and will now run for another four years, under a proclamation Biden issued Friday. Former President Donald Trump introduced the tariffs in 2018.

Biden’s move includes an exemption for imported two-sided, or bifacial, panels that are widely used in utility-scale solar projects. The exclusion was first granted by Trump, and though he later tried to eliminate it, the exemption remains in place.

The president is also doubling the allowable import quota for duty-free solar cells to 5 gigawatts, enabling companies to import proprietary cells. A senior administration official said the decision reflected a determination that module manufacturers shouldn’t have to pay a tariff on a key input, given minimal U.S. production of solar cells.

Read more: U.S. Trade Agency Urges Biden to Extend Trump’s Solar Tariffs

Biden faces dueling priorities on solar power. The president’s goals for slashing carbon dioxide emissions depend on boosting renewable power in the U.S. Yet tariffs that help U.S. panel makers compete with Chinese rivals can make it more expensive to reach renewable targets.

The exemption for two-sided panels — previously decried by some domestic manufacturing advocates as a loophole — could ensure steady low-cost imports of those devices.

The exemption “is a win for jobs and a win for the president’s climate agenda,” said Heather Zichal, chief executive officer of the American Clean Power Association. Meanwhile, extending the tariffs for monofacial solar cells and modules “gives the domestic solar manufacturing industry four more years to adjust to import competition as intended by the statute.”

Solar Energy Industries Association Chief Executive Officer Abigail Ross Hopper also praised the exemption, calling it part of a “balanced solution” by Biden. “Today’s decision recognizes the importance of this innovative technology in helping to improve power output and lower costs in the utility segment,” she said in an emailed statement.

The U.S. International Trade Commission recommended extending the tariffs last year after determining that solar imports remain a threat to U.S. manufacturers.

The vast majority of utility-scale solar projects in the U.S. use the two-sided panels, which increase energy production by generating power on both sides. They typically cost about 1 to 2 cents more per watt than the one-sided alternatives subject to the tariffs, said Jenny Chase, head of solar analysis at BloombergNEF.

The exemption was a blow to some domestic manufacturers. First Solar Inc. fell as much as 5.5%.

The company’s chief executive officer, Mark Widmar, said the exemption gives “unlawfully subsidized bifacial panels an instant, artificial advantage over other panel types,” based solely on the location of cells on the equipment. “With bifacial being the dominant Chinese solar product today, this decision effectively allows China to outflank American efforts to grow self-reliant solar supply chains.”

U.S. manufacturing advocates warned the exemption could be abused. On Friday, the Coalition for a Prosperous America called it “another huge giveaway to China.”

“The White House’s policy on solar would build back Beijing more than America,” said Nick Iacovella, a senior vice president at the coalition.

China dominates the world’s solar manufacturing, though the U.S. imports most of its panels from Thailand, Malaysia and Vietnam, including from factories owned by Chinese companies. The tariffs Biden is extending are layered on top of existing anti-dumping and countervailing duties on solar cells and panels from China.

The senior administration official stressed that tariffs alone are not going to bring back solar cell production or grow module production in the U.S. sufficiently to meet the country’s needs.

Solar supporters have urged congressional passage of legislation with expanded tax credits for renewable energy and advanced energy manufacturing. Those provisions were part of the president’s broad tax-and-spending legislation, which has stalled in Congress.

Biden separately has directed the U.S. trade representative to conclude agreements with Canada and Mexico with the aim of excluding them from the tariffs.

— With assistance by Ari Natter, and Jenny Leonard