Backlash predicted to hefty new US solar anti-dumping tariffs

The international solar industry sector is holding its collective breath as it awaits the real fallout from the US Commerce Department’s decision today to punish China solar panel makers with hefty tariffs ranging from about 31 percent to as high as 250 percent on charges of illegal “dumping.”

The Chinese have so far remained silent on the decision, which was announced overnight in Asia, but it won’t stay mum for long and the response is almost certain to be more than measured.

Many opponents of the tariffs in the US fear an all-out trade war, with China levying heavy tariffs of its own on US polysilicon, polymers and manufacturing equipment producers which the Chinese claim benefit from low-cost hydroelectricity in Tennessee and Washington states. US companies in the solar industry supply chain reported USD2.6 billion in exports in 2011, including about USD700 million to China.

The Washington-based Coalition for Affordable Solar Energy (CASE), which includes more than 100 companies, claims the levies would cost US jobs which are mainly in sales, marketing, design, installation, engineering and maintenance of solar projects. It also said the duties they would drive up costs for the clean energy source in the US, stunting its fast growth.

The new tariff was "a heavy blow to America's solar industry," Jigar Shah, head of CASE, told Reuters. Shah said he hoped the tariffs would be reduced before they are finalized later this year, since they would likely cost thousands of jobs in the nascent industry. One way or another, the cost of installing photovoltaics in the US will rise.

China's solar companies, which hold more than 60 percent of the global market, have largely relied on subsidized markets in Europe and the US in recent years for sales of their products, prompting criticism that huge loans from Chinese state-run banks and low-ball pricing gave the Chinese companies an unfair advantage.

The duties may prompt effected Chinese companies to shift production to other countries to evade the duties. They will almost certainly look at concentrating sales efforts on their own domestic markets as well as other regional countries such as India and Japan, both of which are planning massive solar installations.

The new US ruling stems from a complaint filed last October by the US subsidiary of Germany's SolarWorld AG, and six other US companies that alleged unfair competition and had sought duties well above 100 percent.

In a preliminary decision in March, the US Commerce Commerce Department agreed that China had provided subsidies deemed illegal by the World Trade Organization and imposed tariffs of 2.9 percent to 4.7 percent, which were significantly lower than what the petitioners sought.

Under its new ruling Wuxi Suntech and Trina Solar will face tariffs of 31.22 and 31.14 percent, respectively, and 59 other solar panel exporters will be hit with a 31.18 percent tariff. The rest of the Chinese export market will face a 249.96 percent tariff. The tariffs apply to crystalline silicon photovoltaic cells and will be retroactive for 90 days.

The department is expected to make its final decision this fall and will begin collecting the tariffs if the International Trade Commission determines in November that the under-priced panels are injuring the solar industry.

"Today, SolarWorld and the many industry players who embrace the sustainable efficiency gains and price declines that come from fair competition can take heart that the US government is standing up against Big China Solar," Gordon Brinser, president of SolarWorld Industries America, said in a statement.