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U.S. orders tariffs on Chinese solar panels

Commerce Department announces the duties after a finding that Chinese solar panel makers 'dumped' their goods. If approved, the tariffs are expected to have a significant effect on the industry.

May 18, 2012|By Don Lee, Los Angeles Times
  • In just a few years, China has grabbed about half the U.S. market for solar panels. Above, Chinese workers inspect a solar panel at the Tianxiang Solar Energy Equipment Factory in Huaibei, China.
In just a few years, China has grabbed about half the U.S. market for solar… (AFP/Getty Images )

WASHINGTON — The Obama administration ordered tariffs of 31% and higher on solar panels imported from China, escalating a simmering trade dispute with China over a case that has sharply divided American interests in the growing clean-energy industry.

The Commerce Department announced the stiff duties Thursday after making a preliminary finding that Chinese solar panel manufacturers "dumped" their goods — that is, sold them at below fair-market value.

The widely anticipated ruling, if affirmed by U.S. trade officials this fall, is expected to have significant implications for both the global production of solar cells, now largely in China, and the growth of the solar energy industry in the U.S., which employs about 100,000 people in manufacturing, installation and services.

More than 60 Chinese firms, includingSuntech Power Holdings Co., the world's largest solar panel maker, and Trina Solar Ltd., face a 31% duty on their exports to the U.S., retroactive to shipments made in February. All other Chinese exporters of solar cells will be hit with a tariff of 250%.

In just a few years, China has grabbed about half the U.S. market for solar panels. U.S. imports of Chinese solar cells — the primary component in solar panels — were valued at about $3.1 billion last year, up from $640 million in 2009, according to the Commerce Department.

The tariffs are more than what many industry executives and analysts were expecting.

They are on top of the Commerce Department's duties of 2.9% to 4.7% imposed in March on Chinese solar panel imports for illegal subsidies. The anti-subsidy tariffs were seen as modest and unlikely to have much of an effect on the U.S. solar energy market. Chinese companies and government officials largely took that decision in stride.

Thursday's announcement elicited immediate praise from U.S. solar panel manufacturers, who called the ruling an important victory for American jobs and the future of one of the country's important renewable energy industries.

"The verdict is in," said Gordon Brinser, president of SolarWorld Industries America in Hillsboro, Ore., which filed the original complaint in October that brought the Commerce Department investigation. "Commerce has now confirmed that Chinese manufacturers are guilty of illegally dumping solar cells and panels in the U.S. market."

Sen. Sherrod Brown (D-Ohio) joined in the applause, saying the decision will help establish a "fair and level playing field" for U.S. manufacturers, including many in his state. Brown and Sen. Charles E. Schumer (D-N.Y.) have proposed requiring domestic content in solar panels for businesses and people wanting to receive a 30% tax credit for buying and installing solar energy.

But U.S. firms that develop solar projects and install them decried the anti-dumping duties, saying that they risked a trade war with China and threatened to slow or halt the momentum of solar installations in the U.S.

"Wow, this is upsetting," said Tony Clifford, chief executive of Standard Solar, a solar developer and installer in Rockville, Md.

Clifford buys a majority of his panels from Suntech and other Chinese makers. He argued that U.S. imports of cheaper Chinese solar panels had provided the catalyst for an overall dramatic price reduction in the last two years that has made solar installations more affordable for homes and businesses.

Clifford said the cost of outfitting a typical home today with solar panels runs about $20,000 — half of what it did two to three years ago. Customers also benefit from a 30% tax credit until 2016. That doesn't give the solar industry much time to become cost competitive with electric power, he said.

The tariffs would apply to Chinese-made solar cells, regardless of where the panels are made. Chinese solar energy companies could avoid the tariffs by shifting production of solar cells to nearby countries, then bringing those cells to China for assembly into panels.

Thursday's action is one of the strongest by the Obama administration in addressing complaints of unfair Chinese trade and economic practices — an area that has made Obama a target of criticism from Republicans who say he's too soft.

In the past, Chinese officials have bristled at the prospect of major tariffs, suggesting that Beijing could retaliate against American imports to China.

Earlier this year, Obama established a new trade enforcement unit to crack down on violators, specifically naming China as a potential target, as part of an overall strategy to boost domestic manufacturing, exports and jobs. But it isn't clear what the Commerce Department ruling will mean for U.S. employment.

Even as some domestic solar makers have shut down or cut employment, partly because of weaker growth in places such as Europe, there have been significant job gains at U.S. businesses developing and installing solar panels.

Robert Atkinson, president of the Information Technology and Innovation Foundation, a nonpartisan Washington think tank, said that even if the U.S. solar energy industry loses some workers in the short run, it's important to apply measures to ensure fair competition for the long haul.

"That is never a reason for turning a blind eye to mercantilist trade practices," he said.

Of about 100,000 people employed in the industry last year, a little more than half were involved in solar installation, about one-fourth worked in manufacturing and the rest in sales and distribution, according to a Solar Foundation study.

don.lee@latimes.com

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