The U.S. has decided to impose a tax of up to 254% on Chinese companies manufacturing solar panels in Southeast Asia to evade import duties starting from June 2024. Solar panel makers from Cambodia, Malaysia, Thailand and Vietnam will all be subject to the tax unless they can prove that key components of their products do not come from China.
According to the U.S. Department of Commerce, solar panel manufacturers in the four countries can undergo a certification process to prove that their products do not originate in China to avoid the tariffs. To attain certification, their solar cells and photovoltaic panels must use wafers and other essential components that are not sourced from China.
The U.S. has imposed tariffs on solar panels imported from China since 2012. Former US President Donald Trump initiated a trade war with China after taking office in 2017, imposing more tariffs on Chinese products. Some U.S. manufacturers believe that China has moved production to these four Southeast Asian countries to circumvent strict U.S. anti-dumping regulations aimed at limiting imports from China.
At the end of 2022, the U.S. Department of Commerce pointed out that Chinese companies such as BYD, Trina Solar, Vina Solar, and Canadian Solar have established small-scale operations in the above four countries to improve their products which are then exported to the U.S. market in order to evade U.S. tariffs.
The U.S. solar industry relies heavily on imports from Southeast Asia, which account for 75% of solar panel supply. The move could drive up the cost of renewable energy and impede the development of clean energy in the country.
The decision is currently facing opposition from some U.S. companies that rely on solar panels produced abroad. But that's good news for the U.S. small solar panel industry. The industry has been competing with China for years and has received new investment thanks to subsidies from the Inflation Reduction Act (IRA).