US trade agency favors extending solar tariffs, despite developer opposition

The US International Trade Commission recommended that President Joe Biden extend import tariffs on solar cells and modules for another four years.

The commission, known as the USITC, said in a Dec. 8 report that while domestic solar manufacturers have made a "positive adjustment" to foreign competition since the tariffs were imposed in 2018 by former President Donald Trump, companies in the U.S. continue to require trade protection "to prevent or remedy serious injury."

It is up to Biden to decide whether to maintain the tariffs, which are set to expire in February.

The Solar Energy Industries Association, or SEIA, a trade group that opposes the duties, urged Biden to let the tariffs expire.

"Growing American solar manufacturing is critical to our long-term clean energy future, but years of tariffs have not moved the needle nearly enough to justify the USITC's recommendation today," SEIA President and CEO Abigail Ross Hopper said. "President Biden has set a bold vision for the US to lead the world on clean energy. Extending these tariffs will hold us back from realizing that vision."

The Biden administration has also made it a priority to boost domestic manufacturing. The Build Back Better Act, which is being negotiated in the Senate, includes tax credits for domestic solar manufacturing. However, the USITC said production incentives are not a substitute for the safeguard tariffs it is recommending.

Capital investment hindered

Low-priced imports have hindered capital investment and funding for research and development by US manufacturers since the solar tariffs were imposed, the commission said, so "it is not surprising that there have been limits to its success in these efforts."

US production of crystalline silicon solar modules increased 371.8% between 2018 and 2020, to 2.2 GW, according to the commission report. That is a fraction of the 19.2 GW of solar capacity the country installed last year.

"Given the industry's already poor financial condition, as well as the impediments that the domestic industry has faced to its adjustment efforts, such as the bifacial exclusion and the COVID-19 pandemic, an extension of less than four years would not appear to be sufficient for the industry's efforts to adjust to import competition," the commission said.

The USITC recommended lowering the cell and module tariffs by 0.25 percentage points annually. It also suggested maintaining a tariff exemption for the first 2.5 GW of cells imported annually.

Domestic module manufacturers said they need access to more duty-free cells to remain competitive. However, the commission said such a move would hurt efforts to encourage domestic cell production.

Whereas US module manufacturing increased under the Trump-era tariffs, the commission said cell production declined.