US To Levy Tariffs on South Asian Solar Panel Imports, Here’s Why

US trade officials announced on Friday a new round of tariffs on solar panel imports from four Southeast Asian nations after American manufacturers complained that companies there are flooding the market with unfairly cheap goods.

It is the second of two preliminary decisions that President Joe Biden's Commerce Department is making this year in a trade case brought by Korea's Hanwha Qcells (000880.KS) Arizona-based First Solar Inc (FSLR.O) and several smaller producers seeking to protect billions of dollars in investments in US solar manufacturing.

The group, the American Alliance for Solar Manufacturing Trade Committee, accused big Chinese solar panel makers with factories in Malaysia, Cambodia, Vietnam and Thailand of causing global prices to collapse by dumping products into the market.

Dumping Duties On South Asian Solar Panel Imports

According to a preliminary decision posted on the US Commerce Department's website on Friday, the agency calculated dumping duties of between 21.31 per cent and 271.2 per cent, depending on the company, on solar cells from Cambodia, Malaysia, Thailand and Vietnam.

Jinko Solar (688223.SS) received duties of 21.31 per cent for products made in Malaysia and 56.51 per cent for those produced in Vietnam.

China's Trina Solar (688599.SS) received a dumping margin of 77.85 per cent for products it makes in Thailand and 54.46 per cent for those it produces in Vietnam.

In contrast, the Commerce Department did not lay out any dumping margin for Hanwha Qcells products made in Malaysia. In October, the department had calculated subsidy rate of 14.72 per cent for the company.

The department's final determinations are set for April 18, 2025, with the International Trade Administration set to finalize its determinations the following June 2 and final orders expected June 9.

"With these preliminary duties, we are moving closer to addressing years of harmful unfair trade and protecting billions of dollars of investment in new American solar manufacturing and supply chains," said Tim Brightbill, partner at Wiley Rein and lead counsel to the petitioners.

Representatives for Jinko and Trina were not immediately available for comment.

Most solar panels installed in the United States are made overseas, and some 80 per cent of imports come from the four nations targeted in the Commerce Department probe.

Worries From China's Massive Manufacturing Power

The Biden administration this year raised the alarm over China's massive investment in factory capacity for clean energy goods. Biden's landmark climate change law, the Inflation Reduction Act, includes incentives for companies that produce clean energy equipment in the United States - a subsidy that has prompted a flurry of plans for new solar factories.

President-elect Donald Trump has called the Inflation Reduction Act too expensive, but also has said he plans to slap hefty tariffs on a range of sectors to protect American workers.

Dumping occurs when a company sells a product in the United States at a price below its cost of production or lower than what it charges in its home country.