The economic theory behind solar tariffs is simple: Solar cells and panels made abroad are often cheaper, thanks to lower manufacturing costs and generous government subsidies from countries like China. So taxing imported panels should give the U.S. solar industry a fighting chance at survival.
At least that has been the thinking over the last 10 years and under three different presidential administrations. There’s just one problem – the majority of the U.S. solar industry has never supported them, arguing the tariffs have done nothing to bolster domestic production and have actually slowed the pace of decarbonization.
This contradiction has become abundantly clear over the last two months. In late March, the Biden administration quietly announced plans to investigate a complaint from a small solar manufacturer called Auxin Solar, which argued that Chinese firms are circumventing trade restrictions by manufacturing solar panels and cells in Southeast Asia.
The response from the U.S. solar industry was swift. Trade groups called the investigation a “disaster,” “devastating,” and a move that would “effectively freeze” solar development at a time when more renewable energy sources are desperately needed. Eighty percent of the solar panels imported into the U.S. come from Cambodia, Malaysia, Vietnam, and Thailand. If the investigation supports Auxin’s complaint, those countries would be subject to additional tariffs on imports to the U.S. Earlier this month, a bipartisan group of 22 senators sent a letter urging President Joe Biden to quickly issue a preliminary finding, or risk “massive disruption” to solar companies unsure if prices for panels are about to skyrocket.