U.S. Imposes Tariffs on Solar Panels from China

March 21, 2012 Posted by China Briefing Reading Time: 2 minutes

Mar. 21 – The U.S. Commerce Department announced that it would impose a 2.90 percent to 4.73 percent tariff on Chinese-made solar panels on Tuesday after a preliminary investigation showed that Chinese manufacturers have been benefiting from unfair government subsidies. Additional tariffs could occur in mid-May when the Commerce Department determines whether to impose anti-dumping duties on Chinese solar-panel manufacturers.

A tariff on Chinese-made solar panels has been anticipated by industry insiders for some time now, however the expected tariff was generally much higher than the one that has actually been realized. According to Tuesday’s ruling, Suntech Power Holdings Co., China’s leading manufacturer of solar technology products, will be subject to a specific tariff of 2.9 percent, while a 4.73 percent tariff will be imposed on Trina Solar. All other Chinese manufacturers of solar panels will be levied a 3.61 percent duty.

“Punitive tariffs of less than 5 percent would be manageable for Chinese solar makers given that their panels are sold 25 to 30 percent cheaper than U.S.-made panels,” Min Li, head of alternative energy at research firm Yuanta Securities, told Reuters. Chinese solar panel manufacturers rely on exports for over 90 percent of their earnings, and the United States is their second-largest market after Europe.

According to the U.S. Commerce Department, China controls about 50 percent of the U.S. market for solar panels and the United States imported about US$3.1 billion worth of solar panels from the country in 2011.

U.S. domestic solar panel makers have welcomed the decision to impose tariffs on Chinese-made solar panels, as it helps to expose unfair Chinese trade practices while restoring fair competition and leveling the playing field.

Some have feared that high tariffs could lead to a sharp increase in global prices, thus undermining the surging growth in solar development in the United States. However, tariffs ranging from 2.9 percent to 4.73 percent, should cast little influence on the status quo of the solar industry for both China and the United States. Such a moderate tariff also suggests that the Obama Administration is very cautious about waging a trade war against China at this moment.

This move comes just one week after the United States, the European Union and Japan challenged China’s export restrictions on rare earths with a case filed at the World Trade Organization.

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