The U.S. Department of Commerce made a decision Tuesday, June 3rd, that it would impose tariffs on Chinese-made solar panels. Chinese manufacturers would be taxed from 18.56% to 32.21%. A preliminary decision on the anti-dumping section of the complaint is due by July 25 and if approved by the DoC would go into effect August 18.
In economics, “dumping” is a form of predatory pricing in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.
SolarWorld Industries America, the American wing of a German company, filed a complaint against multiple Chinese manufacturers that prices their panels below normal value. “The import duties, which are in line with our expectations, will wipe out the price in competitiveness of Chinese products in the U.S. market,” said Zhou Ziguang, analyst at the Chinese investment bank Ping An Securities in Beijing.
The SEIA (Solar Energy Industries Association) expressed concern over SolarWorld and Chinese manufactures building tensions and advised them to settle the dispute before the industry saw serious setbacks. SolarWorld stated that Chinese solar producers had an unfair advantage such as, discounted loans and free utilities. Although, the U.S. Government does provide rebates and incentives to those who purchase solar panels.
“Today is a strong win the for the U.S. solar industry,” said Mukesh Dulani, president of SolarWorld Industries America, based in HIllsboro, Oregon. “We look forward to the end of illegal Chinese government intervention in the U.S. solar market, and we applaud Commerce for its work that supports fair trade.”
The U.S. is ranked second in the world in clean energy production: a $36.7 billion dollar industry. China leads the market with $54.2 billion dollars, according to the Pew Trust Report. Imposing levies on Chinese manufacturers would allow American companies to become price competitive. This DoC decision would prompt American investors to take action in domestic panels.
“You have all these manufacturers that are seeing this really rapid change in their ability to sell into the market and the prices at which they have to sell and who their competitors are,” said Shayle Kann, vice president for research at GTM Research, which tracks clean-tech industries. “The solar market is growing, really volatile, and strategic for a lot of these countries.”
Cheap Chinese technology was a major catalyst in the boom of the American solar industry. Cheap panels allowed domestic installations and maintenance to flourish. In March 2012, the first trade war between SolarWorld and Chinese manufacturers took place; the duties initially only covered solar cells. Chinese companies had been exploiting a loophole in the first sanction: shipping their panels to be sent to third-party countries such as Taiwan to be assembled then to the U.S. This location change did little to cost structure for Chinese manufacturers.
In retaliation, China imposed tariffs in January 2013 on American and South Korean polysilicon. The base ingredient for conventional photovoltaic solar panels. But it didn’t start there, in 2012, the U.S. Department of Justice accused Chinese military officers of hacking into the computer systems in the United States, including SolarWorld. The hackers stole thousands of files of SolarWorld’s financial health, manufacturing data and costs, as well as sensitive legal communications related to the trade war case.
“Although we’ve succeeded in establishing direct communications between the parties — and are working with all segments of the industry to find a consensus solution — we’re quickly running out of time,” Rhone Resch, chief executive of the Solar Energy Industries Association, the main trade group, said in a statement. “These damaging tariffs will increase costs for U.S. solar consumers and, in turn, slow the adoption of solar.”
For SunPower, it is unlikely that these chain of events will have a negative effect on the company. It instead will allow SunPower to be price competitive in the American solar market. SunPower’s solar panels are made in Milpitas, California. SunPower has installed numerous federal and commercial panels in the EPA, U.S. Department of Energy, U.S. National Park Service, as well as multiple naval and air forces, Target, Whole Foods, Tiffany’s, and Microsoft. SunPower continues to be a supporter and contributor to American jobs.