Biden will wave tariffs on solar panels hit by investigation for 24 months

The US President is set to wave tariffs on solar panels entering the country from Cambodia, Malaysia, Thailand and Vietnam for two years. The decision comes after an investigation by the Commerce Department froze the green imports, stalling as many as 300 solar projects across America.

The Commerce Department investigation was concerned that China was using subsidiaries in the four Southeast Asian countries as a way to avoid US tariffs. It began its investigation on March 25 after Californian-based Auxin Solar filed a petition asking for an investigation into the matter. So far, officials have not found any evidence of trade infringements.

The four countries provide as much as 82% of the panels that are used in the US. According to the New York Times, within weeks, the freeze was already causing companies to consider layoffs as projects were postponed and cancelled.

The investigations can take as long as 5 months, making the standstill all the more concerning as companies feared retroactive tariffs of as much as 250%. Biden’s decision to wave the tariffs should put some of these concerns to rest.

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It was reported by Reuters that Biden would use executive action and draw on the 1950 Defense Production Act (DPA) to enact the waiver and further drive US solar panel manufacturing, as well as other green technologies.

The DPA gives presidents the power to instruct US industries to expand production or prioritise certain contracts for the national interest.

A source told Reuters that the waiver would only apply to the four countries and would run alongside the investigation – which is being conducted independently of the government. It was also reported that any imports over the 24 month period will not be subject to duties, no matter the outcome of the investigation.

The tariffs on Chinese solar panels began in 2012 under the Obama administration, in an effort to boost domestic production as China was dominating the market. The tariffs were then extended by Trump in 2018, and again by Biden in February this year.

In response to the China tariffs, over the last decade, US companies have been buying solar panels from the four other Southeast Asian countries.

In 2021 as many as 24 gigawatts of new solar capacity were installed across the US, but around just 20% of the solar panels were manufactured in the US. The rest were mainly imported from the four Southeast Asian countries involved in the investigation.

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Biden’s decision to waive the solar panel tariffs can be seen as part of a larger ambitious environmental agenda and a move to boost the US industry.

For example, earlier this month the administration said it would be cutting costs in half for wind and solar energy projects. This month the Environmental Protection Agency also moved to return power to states to veto gas pipelines and the government banned the disposal of mining waste in Alaska in May.

This is not the first time the President has used the DPA: In April it was reported that the administration would be using the act to encourage domestic production of domestic electrical vehicle battery material production, and during the earlier days of the pandemic it was invoked to bolster vaccine production.

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