Biden Solar-Tariff Exemption Challenged by US Panel Makers

(Bloomberg) -- A pair of US solar manufacturers challenged the Biden administration’s moratorium blocking tariffs on some panels imported from Southeast Asia through early June, opening a new risk for a sector already grappling with supply-chain obstacles.

The little-noticed challenge, filed last week in the US Court of International Trade, takes aim at President Joe Biden’s move to neutralize a trade threat that had slowed panel imports from the region. It follows the US Commerce Department’s August conclusion that some Chinese solar manufacturers have dodged 11-year-old anti-dumping and countervailing duties by assembling equipment in Cambodia, Malaysia, Thailand and Vietnam — countries that provide the bulk of the US solar supply.

Normally, most affected imports would already be facing expanded duties as a result, but Biden ordered a pause in those tariffs for two years in a bid to sustain domestic renewable power development while companies expand American solar manufacturing capacity. 

The challenge by module-maker Auxin Solar Inc. and Concept Clean Energy Inc., which makes solar structures, targets a Commerce Department regulation that blocks the collection of any new anti-dumping or countervailing duties on solar panels and cells imported from the four countries until June 6. 

The companies argue there is no legal basis for what they term an “ill-begotten tariff holiday” that effectively rewards the Chinese government “with unfettered US market access to the detriment of existing US manufacturers and new entrants” trying to build a domestic solar supply chain. 

“Having found that Chinese solar producers also evade US trade measures using third country export platforms, the Biden administration nonetheless turned its back on American solar manufacturing workers,” the companies say in their filing. “It failed to follow established law and instead provided a tariff-free holiday exclusive to Chinese-linked trade cheats.”

Imports of affected gear have soared under the moratorium — “a massive and sustained wave” of cheap foreign panels using components from China that the companies call an “existential threat.”

When Biden ordered the tariff moratorium in 2022, the threat of new duties had prompted some companies to halt shipments, delaying some US solar projects and suspending work on others. Biden’s move singlehandedly revived panel imports from Southeast Asia, sending them surging to record levels last year.  

The risk of tariffs opened by the legal challenge could deter some shipments before June. Even so, companies have amassed stockpiles of panels in the US before the tariff moratorium ends that some analysts say well exceed annual domestic demand, potentially blunting the immediate impact. 

The companies mounting the challenge also “face a steep uphill battle in their effort to reverse” Biden’s proclamation, said Timothy Fox with ClearView Energy Partners, a Washington-based research firm. Although the companies argue that Biden “used an ‘unprecedented,’ ‘seldom used’ and ‘rarely used’ provision of law, we would suggest that a law is not dependent on how often it is invoked.”

(Updates with analyst comment and detail from filing, starting in sixth paragraph.)

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