After a more than year-long investigation, federal officials have concluded that five Chinese solar panel companies have been skirting US tariff laws by routing their operations through four other Southeast Asian countries.
The Commerce Department investigation, which began in March 2022, examined eight companies that manufacture solar panels and parts in Cambodia, Malaysia, Thailand and Vietnam. A Commerce Department official said Friday that five of them – BYD Hong Kong, Canadian Solar, New East Solar, Trina and Vina Solar – should have additional tariffs imposed on them.
After releasing preliminary findings in December that found four companies were violating tariff laws, the department added New East Solar, a Cambodian company, to the list after the company refused federal officials’ attempts to audit their factory.
“What we did after the preliminary findings is go on site and look at their books to see whether or not they were telling the truth,” a Commerce Department official told reporters. New East Solar, the official said, “essentially said, ‘Please leave, we will not cooperate.’” Commerce added it to the list because it could not independently verify the company was not violating US tariff laws.
The department also determined that three other solar manufacturers – Hanwha, Jinko and Boviet – were in compliance with US laws.
However, the additional tariffs won’t apply until June 2024; President Joe Biden waived the tariffs on solar panels last summer for a two-year period after outcry from US solar companies who were concerned the tariffs could effectively shutter the industry.
“Because of the presidential proclamation that came out in June of 2022, even though we’re making final findings, no duties are being collected until June of 2024,” the Commerce official said.
China has a massive hold on the global supply chain for solar panels and parts – including in the US – but there have been allegations of human rights abuses in its manufacturing, which China has denied, in addition to trade concerns. The US solar industry is currently bringing more of its manufacturing back to the US, aided by tax credits from the Inflation Reduction Act.
The investigation was launched after one small US-based company, Auxin Solar, filed a complaint in February 2022 suggesting that some companies doing business in Southeast Asia might be avoiding tariffs. Auxin CEO Mamun Rashid previously told CNN that the complaint “was existential” for his company.
“When prices of finished panels from Southeast Asia come in below our bill of materials cost, American manufacturers cannot compete,” Rashid said, adding that “if foreign producers are circumventing US law and causing harm to US producers like Auxin Solar, it needs to be addressed.”
But last year, the very presence of the Commerce investigation ground much of the US solar industry to a halt – canceling or delaying hundreds of projects. And it created a crisis for Biden’s administration as it was trying to spur massive solar development as part of the president’s ambitious climate goals.
Last year, the solar and battery storage industries invested $100 billion into the US, according to trade group the Solar Energy Industries Association.