A two-year reprieve on new import tariffs on certain solar products could be rescinded one year into its life, with significant impacts on U.S. companies manufacturing and importing solar products.

Background

The U.S. Department of Commerce (“Commerce”) has imposed antidumping and countervailing (AD/CVD) duties on imports of solar cells and modules from China and Taiwan since 2012. In February 2022, domestic solar products manufacturer Auxin Solar, Inc. requested that the government expand these duties to imports from Malaysia, Thailand, Cambodia and Vietnam made from Chinese components—components that Auxin alleged circumvent the duties imposed on Chinese imports.

Facing argument from other factions of the U.S. solar industry that this duty expansion would halt the development of green energy efforts, on June 6, 2022, President Biden issued Presidential Proclamation 10414, announcing a two-year pause on new import tariffs for solar products. Presidential interference in an antidumping or countervailing duty investigation is extremely rare. In this case, the President expressly granted the reprieve to allow the domestic solar panel manufacturing industry time to ramp up domestic production while allowing imports to continue satisfying the current demand for solar energy components. The Administration expressly stated the waiver was intended to be a short-term stop gap to facilitate this domestic manufacturing investment. Commerce subsequently issued a final rule implementing the President’s waiver.

Antidumping and countervailing duties are intended to counteract injury to a domestic industry resulting from imports—and absent the waiver, AD/CVD duties on at least certain imports from Malaysia, Thailand, Cambodia and Vietnam made from Chinese components would have begun to be collected in December 2022, when Commerce preliminarily found that certain imports from those countries were circumventing the existing duties on Chinese solar equipment. The Department of Commerce’s final determination in the circumvention proceeding is due on August 17, 2023. With the Administration’s waiver in place, duties would not come into effect until nearly 10 months after Commerce’s final determination, and 18 months after they would have otherwise been collected—which, some argued, left domestic solar product manufacturers unprotected and vulnerable in the interim. 

Premature End to President Biden Waiver?

The Administration’s atypical waiver may now end prematurely. In March 2023, Members of Congress introduced a bipartisan resolution, H. J. Res. 39, to rescind the Commerce rule implementing the President’s waiver. The resolution advanced from the House Ways and Means Committee with bipartisan sponsorship last week and is awaiting a vote by the full House. If the waiver were revoked, AD/CVD duties would immediately come into effect under the preliminary determination but could change when the final determination is issued. 

President Biden has announced that he will veto the resolution if it receives Congressional approval, and it is unclear whether there is sufficient Congressional support for termination of the waiver to overcome a veto – potentially leaving the tariff waiver in place through June 2024. In addition, the President announced that he does not intend to extend the tariff suspension when it expires in June 2024. The American Clean Power Association and the American Council on Renewable Energy, amongst others, have released a joint letter urging members of Congress to oppose the resolution.

With the future of the waiver now in doubt, companies benefiting from the reprieve should consider seeking alternative supply chains and taking advantage of incentives to invest in domestic manufacturing during what remains of the waiver period. In addition, companies adversely affected by either the waiver revocation, if it occurs, or the Department of Commerce’s final determination, may pursue litigation. 

On April 28, 2023, the House voted 221-202 to revoke the Administration’s two-year suspension on imposing new tariffs on solar products.  The Senate will vote on the resolution, possibly as early as the week of May 1, 2023, where it will need a simple majority of votes to pass.