Foreign Affairs

Chinese Solar Companies Have Been Dodging Tariffs, Biden Admin Says

The Department of Commerce (DOC) determined Friday that five Chinese solar panel companies have been dodging U.S. tariffs by directing their operations through other Asian countries not subject to the import restrictions.

The DOC found in its probe that Trina Solar, Canadian Solar, BYD and Vina Solar have all used other countries in Southeast Asia, such as Vietnam, Thailand, Malaysia and Cambodia, as conduits to evade tariffs designed to protect the relatively young American solar industry from Chinese competitors that can undercut them with a cost advantage, which in some cases may be derived from the use slave labor of detained Uyghur Muslims in supply chains. The findings may complicate the Biden administration’s plans to rely on solar panels as a key pillar of its sweeping climate agenda, which aims to have the U.S. economy reach net-zero carbon dioxide emissions by 2050.

“Today’s final determinations underscore Commerce’s commitment to holding China accountable for its trade distorting actions, which undermine American industries, workers, and businesses,” the agency said in a Friday press release. The DOC said in December 2022 that its preliminary findings indicated that Chinese solar firms had been sneaking around the trade barriers.

John Kerry is asked what his message would be to oil and gas workers who “see an end to their livelihoods”:

“What President Biden wants to do is make sure that those folks have better choices… That they can be the people to go to work to make the solar panels.” pic.twitter.com/i9TYXlD9Jg

— Daily Caller (@DailyCaller) January 27, 2021

President Joe Biden waived existing tariffs against Chinese solar panels in June 2022 as industry interests raised their concerns that the tariffs could gum up the progress of the industry, which the Inflation Reduction Act is subsidizing with billions of taxpayer dollars. The House voted to repeal the waiver this spring with a bipartisan bill, which Biden overruled with a May veto that the House subsequently failed to overrule by vote about a week later.

New tariffs could significantly impede progress for the American solar industry, according to E&E News.

Vietnam, Thailand, Cambodia and Malaysia, the four countries named in the DOC’s report, were responsible for about 80% of U.S. solar imports at the time Biden initially moved to waive the tariffs, according to Reuters. China “has an iron grip on every stage of solar manufacturing” for the raw materials and components needed to manufacture solar panels, according to Canary Media.

China accounted for 79% of global production of polysilicon in 2021, a key component of solar panels, in 2021, with 42% of that production coming from Xinjiang province, according to a 2022 report by the International Energy Agency. The Xinjiang province is ground zero for what the U.S. government and 200 human rights organizations have declared a genocide perpetrated by the Chinese Communist Party against the country’s Uyghur Muslim population.

“Solar cells made in one of the four Southeast Asian countries, even if made from wafers from China, that are then exported to a non-inquiry country and further assembled into modules or other products there, before exportation to the United States, are not subject to Commerce’s final circumvention findings,” according to the DOC press release.

The White House, the DOC and all five solar companies mentioned in this report did not respond immediately to requests for comment.