WASHINGTON, D.C. — The U.S. International Trade Commission (ITC) voted to investigate whether solar panels from Southeast Asia are hurting domestic manufacturing. The outcome of the investigation could lead to additional tariffs.

What You Need To Know

  • U.S. manufacturing group alleges Chinese solar manufacturers evaded tariffs by routing products through Southeast Asia

  • Investigation comes as tariffs on Chinese solar products rise to 50% this year

  • Additional tariffs could be slapped on Southeast Asian solar products by the end of the year

A group of American manufacturers brought the antidumping and countervailing duty case before the ITC claiming that Chinese companies have evaded tariffs of up to 50% on Chinese solar products by routing the products through Cambodia, Malaysia, Thailand and Vietnam, which have been exempt from tariffs for the past two years.

Lawmakers and officials have for years accused China of anti-competitive trade practices in which the government subsidizes certain industries, then floods the global market with relatively cheaper products. U.S. industries that can’t compete with those prices then go out of business.

Such practices contributed to the erosion of the steel industry in the Midwest in the 1990s.

“That seems to be the modus operandi of China. They really seem to overproduce and then our companies would just go out of business at such a cheap price,” said Rep. Marcy Kaptur, D-Ohio. “I expect the same is happening with the field of solar.”

Kaptur joined with Sen. Sherrod Brown, D-Ohio, in advocating for the ITC to move forward with the investigation.

Both said tariffs were necessary to protect U.S. solar manufacturers such as First Solar, the company leading the group behind the case. First Solar’s Perrysville, Ohio plant is the largest solar panel producer in the Western Hemisphere.

First Solar executives said the two-year solar tariff exemption in Southeast Asia hurt them when those countries dumped solar products on the global market. They alleged dumping margins—the percent difference between the a good’s export price and the normal value—went up to 271%.

“We were not the only American solar manufacturer to come into existence at the end of the last century, but the grim reality is that we are the only one in scale to remain today,” First Solar executive vice president, general counsel and secretary Jason Dymbort said in a call with reporters.

The tariffs went back into place last week after an investigation by the Department of Commerce determined that Chinese companies benefitted from the exemption in Southeast Asia by moving mostly finished products into those countries and then shipping them to the United States tariff-free.

However, lawmakers and manufacturers said Chinese companies had found new workarounds in the last two years to continue evading tariffs, and that updated tariffs are now needed.

If the ITC rules in favor of the American manufactures, new tariffs could be slapped on Southeast Asian solar products by the end of the year.

The Biden administration is also taking action to boost domestic solar production. In May the White House announced $70 million in grants for U.S. solar companies, to be divided among 18 projects to build out the solar supply chain.

“We've had some big victories on, on finally have an industrial policy in this country to focus on manufacturing and other things, but especially on making things here,” said Sen. Brown.

Tariffs come at a cost, however. Many solar installers and energy companies rely on cheap imported panels to stay competitive with fossil fuels, while more expensive solar panels raise energy costs for consumers.

U.S.-made solar panels cost about 50% more than the global average, according to the Solar Energy Industries Association (SEIA), leading to higher prices for consumers and 62,000 solar jobs lost or not created between 2017 and 2021.