Senate votes to resume solar tariffs, threatening clean energy supply

Moved forward by a 56-41 vote, the U.S. Senate resolved to repeal the two-year pause on tariffs for solar goods from four Southeast Asian countries responsible for about 80% of the U.S. solar panel supply chain. Nine Democrats joined the largely Republican voting group in passing the resolution.

Passed in June 2022 by President Joe Biden, the moratorium halted tariffs on goods shipped from Vietnam, Malaysia, Thailand, and Cambodia. Solar suppliers in these nations are under investigation for harboring tariff-dodging components manufactured in China.

The tariff exemption applies to modules that are imported before June 6, 2024, or modules installed on project sites before December 2024.

The Department of Commerce made a preliminary ruling in December that some suppliers from the four countries are guilty of violating anti-dumping and countervailing duty (AD/CVD) laws. The investigation is expected to conclude with Commerce’s ruling, scheduled for May 2, 2023.

Goods found in violation of anti-dumping and countervailing duty laws would be retroactively assessed with tariffs ranging between 50% to 250% of their shipped value.

Prior to Biden’s 2022 moratorium, the threat of tariffs created supply issues and high levels of risk that led to cancelled and delayed projects. About 20% of utility-scale solar capacity was delayed or cancelled in the first half of 2022 due to supply problems and uncertainty.

Biden’s two-year moratorium is meant to act as a supply bridge while U.S. domestic solar manufacturing ramps up. 

The solar industry has warned that lifting the pause on tariffs now would greatly challenge the nation’s transition to clean energy, as the U.S. currently sources roughly 80% of its solar components from the four Southeast Asian nations.

“The legislation will impose $1 billion in retroactive tariffs and cause 30,000 Americans to lose their jobs this year,” said Abigail Ross Hopper, president and chief executive officer of the Solar Energy Industries Association.

“The United States relies on foreign nations, like China, for far too many of our energy needs, and failing to enforce our existing trade laws undermines the goals of the Bipartisan Infrastructure Law and Inflation Reduction Act to onshore our energy supply chains, including solar,” Senator Joe Manchin said in a statement. “I cannot fathom why the Administration and Congress would consider extending that reliance any longer and am proud to join this Congressional Review Act (CRA) to rescind the rule.”

Ross Hopper said the U.S. does not have enough solar manufacturing capacity to meet demand, and the remaining 14 months of the moratorium are needed to “close the gap.” 

The legislation to repeal the moratorium was moved forward via the CRA and spearheaded by House Representative Dan Kildee (D-MI). Kildee argues that the resolution will help American workers and “hold those who violate U.S. trade laws accountable.”

However, President Biden’s administration said it will veto the resolution, retaining the moratorium. “The Administration strongly opposes H.J. Res. 39,” the White House said in a press release.

“The Senate’s action needlessly undercuts the critical clean energy growth that has been made since the passage of the Inflation Reduction Act. I am grateful for President Biden’s steadfast support of solar energy and applaud his intention to veto this harmful resolution,” said George Hershman, chief executive officer, SOLV Energy, a leading utility-scale solar developer. 

Gregory Wetstone, president and chief executive officer of the American Council on Renewable Energy (ACORE), said the resolution would “bring a halt to the booming solar growth in the U.S.”

“To prevent the loss of tens of thousands of solar jobs, reduce electricity costs, and avoid an increase in harmful greenhouse gas emissions, we urge President Biden to veto this destructive legislation,” he said.

The American Clean Power Association (ACP) called the prospect of retroactive tariffs “punitive,” arguing that it would harm U.S. workers.

“In recent months, the American solar industry has announced billions of dollars in investments in domestic solar manufacturing and energy production facilities. Continued success requires collaboration between American government, business, and labor to overcome real competitive barriers and reclaim America’s solar technology dominance,” said Jason Grumet, chief executive officer, ACP.