This article was published in Scientific American’s former blog network and reflects the views of the author, not necessarily those of Scientific American
This month, the U.S. Department of Commerce announced that new tariffs being levied on Chinese solar panel imports will be almost 10 times higher than previously announced – putting these new tariffs to around 35%. In March the U.S. Commerce Department announced that a 3-5% tariff would be imposed, but reserved the right to revise this figure before the final rule came into effect later this year.
These tariffs are the result of the unanimous finding by the U.S. Trade Commission last December, which stated that “there is a reasonable indication that a U.S. industry is materially injured by reason of imports of crystalline silicon photovoltaic cells and modules from China that are allegedly subsidized and sold in the United States at less than fair value.”
Under the new anti-dumping tariffs on products exported to the United States by Chinese solar manufacturers, products exported these companies will still face the 2.9-4.73% tariffs previously announced. But, 61 companies will face additional tariffs to the tune of 31.14% to 31.22%. Specifically, these additional proposed tariffs will look like this:
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Suntech Power Holdings Co. - 31.22%
Trina Ltd. - 31.14%;
59 other firms - 31.18%.
These companies represent those that cooperated with U.S. investigation proceedings earlier this year. Those companies that did not cooperate face tariffs of up to 250%.
While there are ways for Chinese exporters to keep these tariffs from impacting their bottom line – for example, by constructing solar panels using solar cells imported from outside of China – these alternatives do not come without cost. According to Greentech Media Research analyst Shyam Mehta:
"It is not feasible for [China-based manufacturers] to maintain prices at tariff-free levels and still be profitable…Broadly speaking, they have two strategies: set up cell manufacturing outside China, or use the tolling services of Taiwan-based suppliers to turn wafers into cells there, and then assemble the modules in China. Both strategies would allow the Chinese to bypass import tariffs. We estimate that tolling cells to Taiwanese firms would increase Chinese costs by 6-12%, which is meaningful but manageable."
More to the point for U.S. consumers, in the words of Scientific American’s David Biello:
“Raising that price through tariffs might prevent more U.S. solar companies from going bankrupt like Solyndra and Unisolar did. But the tariffs will also mean higher prices for U.S. customers who want solar power—whether homeowners or utilities.”
China has already responded to these tariffs by threatening to impose a counter-tariff on U.S. polysilicon producers.
Photo Credit:
1. Photo of solar panel by Andreas Demmelbauer and used under this Creative Commons License.