Source: Blog – Alliance for American Manufacturing
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The freeze was put in place in 2022 after installers complained that trade enforcement was upending their planned projects.
Lost in the shuffle of current events last week came a notable bit of news: Two U.S. solar manufacturers have sued the Biden administration over its moratorium on tariffs affecting some solar panels imported from Southeast Asia.
Auxin Solar Inc. and Concept Clean Energy Inc. – the former the same company whose petition in 2022 touched off the U.S. Commerce Department investigation that produced these tariffs – claim the two-year pause is unlawful and “an abuse of discretion.”
The companies argue there is no legal basis for what they term an “ill-begotten tariff holiday” that effectively rewards the Chinese government “with unfettered US market access to the detriment of existing US manufacturers and new entrants” trying to build a domestic solar supply chain.
“Having found that Chinese solar producers also evade US trade measures using third country export platforms, the Biden administration nonetheless turned its back on American solar manufacturing workers,” the companies say in their filing. “It failed to follow established law and instead provided a tariff-free holiday exclusive to Chinese-linked trade cheats.”
Anyone remember this? That 2022 Commerce investigation ultimately found a handful of large Chinese solar manufacturers had been circumventing long-established U.S. anti-dumping and countervailing duties by simply assembling their products in Thailand, Malaysia, Cambodia and Vietnam. But the Biden administration stepped in well before the investigation concluded, and suspended any potential new tariffs amid complaints from solar installers that increasing the cost of imported panels would undercut installation projects. Installers complained that even the hint of new tariffs had scrambled their market.
A freakout ensued. “How Auxin, a small San Jose firm, paralyzed the U.S. solar industry,” blared a Washington Post headline. A website called “Expose Auxin,” since taken down, suggested Auxin Solar “might be a front for interests that would benefit from creating uncertainty and raising electricity prices for American consumers.” Senators grilled the U.S. Commerce Secretary, who argued (correctly) that her department was bound by law to complete its investigation.
All this, because the majority of solar products are imported. Chinese-owned companies, having benefited from decades of state support and a supply chain that runs through a region dotted with forced labor camps, dominate the industry. U.S. installers and many in Congress argued there is not nearly enough domestic manufacturing capacity to meet its needs and the administration’s clean energy adaptation goals. And Biden in trying to justify the moratorium argued it would give domestic manufacturers time to ramp up production.
A lot has happened since then. The Biden-backed Inflation Reduction Act (IRA) – a federal clean energy industrial policy that offers a significant investment tax credit and billions worth of domestic production incentives – was enacted a few months after the moratorium took effect. The Commerce investigation concluded and found that, yes, these companies were doing what they were accused of doing. Biden then vetoed a bill that emerged from Congress that would have overturned his moratorium. And domestic solar manufacturing investments have soared, according to a tracking project called the Clean Investment Monitor.
Wrote the New York Times in November 2023:
In the year since the climate law was passed, companies have announced nearly $8 billion in new investments in solar factories across the United States, according to data from the Massachusetts Institute of Technology and the Rhodium Group, a nonpartisan research firm. That is more than triple the amount of total investment announced from 2018 through the middle of 2022.
To further illustrate the investment underway, the Atlanta Journal-Constitution has a story out this week about the new, fully integrated solar factory that Korean manufacturer QCells is building in Georgia. The company announced last year it intended to spend $2.5 billion in the state to expand its manufacturing footprint and has cited the IRA for making it possible to do so.
At the same time, though, solar imports have surged as installers have rushed to stockpile equipment ahead of the tariff moratorium’s scheduled end in June.
Those surges are what the lawsuit’s plaintiffs are referring to when they argue the moratorium has worked “to the detriment of existing US manufacturers and new (market) entrants” trying to build a domestic supply chain.
And they have a point. The heavy dose of government support meant to establish a solar industry in the United States is great, as all that investment demonstrates. But it remains hard to establish market share when the market remains completely dominated by imports and the government has demonstrated that it will disregard trade rules if the critics complain loudly enough.
And they will undoubtedly complain again, either when a judge agrees with the plaintiffs and ends the moratorium prematurely, or when it ends when it’s supposed to in June. They’re complaining right now.
For more context on where these tariffs came from, you can listen to our 2022 interview with Auxin Solar CEO Mamud Rashid on The Manufacturing Report podcast.
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