Solar panel manufacturer Auxin Solar Inc. told the U.S. Commerce Department that Chinese producers are evading U.S. tariffs by moving some operations to Southeast Asia, reigniting a trade fight in an industry that is critical to the Biden administration's efforts to limit climate change.
California-headquartered Auxin Solar said Feb. 8 that Chinese manufacturers of crystalline silicon solar cells and panels have been assembling products in Malaysia, Thailand, Vietnam and Cambodia from parts and components made in China in order to avoid paying antidumping and countervailing duties that the Obama administration first imposed in 2012. The Commerce Department declined to investigate similar allegations in 2021 because the companies that brought the case refused to publicly identify themselves.
Auxin Solar's petition threatens to raise costs for U.S. solar project developers. If the Commerce Department were to find that Chinese solar companies have been circumventing U.S. tariffs, it could extend the duties to cells and panels made in Malaysia, Thailand, Vietnam and Cambodia, which account for the vast majority of U.S. solar panel imports.
"[Instead] of fairly pricing their [solar] cells and modules for export to the United States, Chinese [solar] producers continued their assault on domestic producers — this time from third country export platforms," Auxin Solar said in a petition requesting a Commerce Department investigation. "Their relentless predatory pricing has been fueled by China's nonmarket subsidization of the upstream solar supply chain, intellectual property theft conducted by China's People's Liberation Army ... and inhumane forced labor practices."
The Chinese Embassy in Washington did not immediately respond to a message seeking comment Feb. 9.
U.S. Trade Representative Katherine Tai has echoed some of the concerns raised by Auxin Solar, saying in public remarks in 2021 that China has used "unfair policies" to dominate the global solar industry.
"Our checks suggest that this cures 'all the deficiencies' of the first [anticircumvention] case," analysts at ROTH Capital Partners LLC wrote Feb. 8 in a note to clients. "This is yet a new risk for the U.S. solar industry as these tariffs ... would be retroactive to the date the [Commerce Department] takes the case on."
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, said the trade group opposes Auxin Solar's request for an investigation.
"This frivolous, self-interested petition could derail the entire American solar energy industry and disable efforts to tackle the climate crisis," Hopper said in a statement.
Auxin Solar's petition to the Commerce Department threatens to scramble U.S. solar supply chains that have been under pressure since mid-2021.
On Feb. 4, President Joe Biden said he will extend solar import tariffs initially imposed by the Trump administration to protect U.S. manufacturers from foreign competition. However, the extension that Biden ordered comes with new exemptions that Auxin Solar and other U.S. manufacturers say will make the duties ineffective at encouraging more domestic production.
That tariff extension followed Biden's signing in late 2021 of the Uyghur Forced Labor Prevention Act, which will ban goods from China's Xinjiang region unless importers can document that their products from Xinjiang were not made with forced labor. The region is a major producer of the raw material polysilicon for solar panels.
In June 2021, U.S. Customs and Border Protection ordered officers to begin detaining imports linked to one of the solar industry's leading raw-material suppliers after the U.S. government said it found evidence that the company had committed labor abuses in Xinjiang.
China has denied the U.S.' allegations.
In response to U.S. trade restrictions, the solar industry has been trying to develop supply chains outside of China. Those efforts appear to depend on expanding production bases in Southeast Asia, leaving U.S. project developers exposed to suppliers that could soon be subject to new American import tariffs.
For example, The AES Corp., the top provider of renewable power to corporate buyers in 2021, sources its solar panels from Vietnam, Malaysia and Cambodia, Leo Moreno, president of AES Clean Energy, a business unit of AES, said in an interview Feb. 4.