Understanding the Current Solar Tariffs

 What It Means & How It Affects Solar

For home and business owners interested in solar energy, tariffs on solar modules and what they signify for the typical person are a source of considerable uncertainty. We’ve put together a short introduction to the factors that affect current solar tariffs and how they’re likely to change in the next few years.

An Anti-Dumping Investigation

The most recent tariff changes are the result of a Department of Commerce investigation into whether solar modules manufactured in Vietnam, Thailand, Malaysia, and Cambodia are being “dumped.” The purpose of the anti-dumping investigation is to determine whether imported modules are sold more cheaply in the United States than in their countries of origin. It is also intended to circumvent Chinese tariffs in order to reduce competition.

While the investigation is ongoing, the Biden administration has exempted these foreign-made modules from tariffs for a period of 24 months and invoked the Defense Production Act for domestic solar manufacturing. The Defense Production Act permits the White House to coordinate with industries when it is deemed to be in the national defense’s best interest. In this instance, the DPA is being utilised to expand the domestic manufacturing of solar panel components. It permits the Department of Energy to assist domestic solar manufacturers.

The Reasoning Behind Tariff Suspension

The initiation of the DOC investigation had immediate effects on the solar industry, disrupting 42% of utility-scale solar development projects. These problems have spread to both homes and businesses and are a big threat to the administration’s goal of cutting greenhouse gas emissions by 50 percent below their 2005 levels by 2030.

The industry’s response to the DOC investigation was based on the assumption that it would find against the solar manufacturers and that the DOC would retroactively impose tariff collection. Therefore, the administration’s action eliminates this possibility and maintains the solar supply chain.

Combining the Defense Production Act with the suspension of tariffs is a way to speed up the switch to solar power and make the U.S. less dependent on solar panels made in other countries.

Tariffs Remaining in Place

Section 201 tariffs on solar cells remain in effect for imports from countries other than the four now exempted. In 2018, Section 201 was enacted with a 30% tariff on goods that decreased by 5% annually. The annual tariff rate quota was increased from 2.5 gigawatts to 5 gigawatts in February, excluding bifacial panels. The extension also allows the US to import solar materials from Canada and Mexico, even though these countries account for less than 1% of total imports.

The Bottom Line

The recent modifications to solar import tariffs are intended to serve as a bridge as domestic production of solar panels increases in the United States. This protects consumers from energy shortages and price fluctuations, which is good news for anyone considering switching to solar energy.