The cost of solar panels in the United States has seen a substantial increase compared to other regions like Europe and Australia, with prices being 45% higher in the U.S. Additionally, solar panels in the United States are approximately 50% more expensive than the global average. Many attribute these high prices to the tariffs imposed on solar panels. This situation has been a matter of concern and has led to ongoing trade disputes in the solar industry.
Presently, the tariffs on imported solar panels are governed by Section 201 of the Trade Act of 1974. These tariffs were introduced back in 2018 through Presidential Proclamation 9693 on January 25, 2018. They initially set the tariff rate at 30% and were meant to be in effect for a four-year duration starting in February 2018. The tariffs were designed to gradually decrease by 5% each year, ultimately reaching a rate of 15% in the final year. As it stands, the Section 201 tariffs on solar panels are scheduled to expire on February 6, 2022.
In addition to these safeguard tariffs, there are other import tariffs and duties that impact the solar panel industry. These include duties of 25% and 10% on steel and aluminum, authorized under Section 232 of the Trade Expansion Act of 1962, as well as certain duties on semiconductors manufactured in China, authorized by the previous administration under Section 301 of the Trade Act of 1974. Furthermore, there are antidumping and countervailing duties in place on crystalline silicon photovoltaic products from China and Taiwan, covering both cells and modules.
An important development occurred in October 2020 when the previous administration issued Presidential Proclamation 10101. This proclamation modified the earlier Proclamation 9693, imposing safeguard duties on bifacial panels, which were previously exempt. Additionally, the modification unexpectedly raised the safeguard tariffs on all imported solar cells from 15% to 18%, citing that the prior exclusion of bifacial modules had hindered the intended remedial impact of the original safeguard measures.
Legal challenges against these tariffs have been mounted, with the Solar Energy Industries Association (SEIA) leading the charge. SEIA, alongside Invenergy Renewables, NextEra Energy, and EDF Renewables, contested the October 2020 modification in the Court of International Trade. They argued that President Trump did not adhere to the safeguard laws’ requirements when issuing the modification proclamation. SEIA’s complaint contended that Trump had failed to fulfill several procedural prerequisites and asserted that any modification should have been “trade liberalizing.”
On March 1, 2021, the Department of Justice (DOJ) filed a motion to dismiss SEIA’s complaint, asserting that the statute permits the president to make modifications to safeguard measures, and that these changes do not necessarily entail reducing or terminating the tariffs.
The DOJ’s motion signals that the Biden administration, for the time being, is not rushing to reverse the previous administration’s actions but rather considers them lawful uses of presidential authority. This comes as the Biden administration has announced plans to increase funding for clean energy and low-carbon technologies, allocating $100 million for alternative energy sources.
The outcome of these developments holds significant importance for solar developers and investors. The solar industry’s growth is closely tied to decreasing costs, and the expiration of safeguard measures on solar panels is expected to stimulate growth and investment in the sector. However, at present, there appears to be no immediate intent to remove these tariffs or make hasty changes.
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