Final Ruling in Auxin Solar Tariff Case Anticipates Cost Hike for U.S. Solar Projects

The U.S. Department of Commerce has revealed that solar panel manufacturers from Vietnam, Malaysia, Thailand, and Cambodia have been sidestepping American trade regulations by employing Chinese-origin materials subject to tariffs, without paying the requisite duties. These countries collectively contribute to almost 75% of solar modules imported into the United States.

The recent ruling will likely result in increased costs for new solar projects within the U.S. Infringing manufacturers will now face additional import levies on their products, a consequence of the solar tariffs instituted during the Obama administration. However, the imposition of these duties is deferred until June 2024, coinciding with the expiration of a waiver established by the Biden administration.

This development holds significance as the United States strives to eliminate greenhouse gas emissions from its power sector by 2035, which presently accounts for a quarter of the nation’s total emissions. The global community is aiming to cap average global warming at approximately 2.7 degrees Fahrenheit to mitigate the most catastrophic consequences of climate change, a goal that currently appears off-track.

Average summer temperatures in the U.S. have escalated by over two degrees since 1970, while winter averages have risen by more than three degrees. The allegations of trade evasion were initiated by San Jose-based solar manufacturer Auxin Solar in February 2022, alleging unfair practices by Chinese suppliers. The Commerce Department’s subsequent investigation found that certain Chinese solar manufacturers and related entities were indeed circumventing U.S. trade duties.

To gain exemption from the new regulation, companies must self-certify that they are not involved in evading U.S. trade duties against China. This exemption will be subject to auditing. Notably, solar cells produced in the four Southeast Asian countries, even if originating from China, and later assembled into products within a non-investigated nation before being exported to the U.S., will remain unaffected by the Commerce Department’s circumvention findings.