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The Department of Commerce’s Tariff Probe Is Crushing America’s Solar Industry

It is past time to end this investigation and restore stability to the US solar industry. Our clean energy future hangs in the balance.

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100% Clean Power Executive Branch

Friday, May 13, 2022

An ongoing trade investigation by the Department of Commerce has paralyzed the American solar industry, with sweeping consequences for the country’s clean energy and climate goals. Since the investigation began in April, more than 300 solar projects across the country have been canceled or delayed, putting 24 GW of clean power at risk. Facing solar panel shortages, at least one utility has already pushed back two coal plant retirements. Depending on the outcome, the solar industry may lose more than 100,000 jobs. The delays also carry massive ramifications for President Biden’s climate agenda, which depends on rapid mass deployment of clean energy.

Commerce kicked off the investigation into imports of solar cells and modules from Thailand, Malaysia, Cambodia, and Vietnam following a complaint from Auxin Solar, a small California-based solar panel manufacturer. Auxin alleged that Chinese companies are assembling and moving products through Southeast Asia to circumvent U.S. import tariffs. Auxin’s argument that the countries in question are merely laundering Chinese products is, in the words of Senator Brian Schatz at a recent hearing, “facially not true”: manufacturers in the four countries undertake processes that according to Commerce’s own ruling are not “minor and insignificant” but instead impart the “essential” nature of the solar cells. But if Commerce grants Auxin’s request, steep tariff liabilities could be imposed on imports from those four countries, which supply about 80% of solar panels used in the U.S. That threat has already frozen the industry, which fears retroactive tariffs on any shipments they take in today.

Commerce Secretary Gina Raimondo must exercise her authority to intervene against this damaging tariff petition and issue an expedited preliminary determination to stop the probe before it inflicts any further harm to the American economy, and President Biden’s clean energy agenda. It is past time to end this investigation and restore stability to the US solar industry. Our clean energy future hangs in the balance.

"We are in a major, major hurry because the solar industry in the United States is at a halt." -@SenBrianSchatz to @SecRaimondo on resolving the current solar tariff investigation. pic.twitter.com/GyvQEKHSGj
— Evergreen Action (@EvergreenAction) May 11, 2022

The US Solar Industry Is Paralyzed and Under Threat

Commerce’s investigation is driving unprecedented uncertainty around the costs of solar deployment, with severe consequences for America’s solar industry. In a survey of 200 solar companies conducted by the Solar Energy Industries Association (SEIA), roughly 75% of respondents reported that their panel deliveries have already been delayed or canceled. SEIA’s projections further found that imposing tariffs would cut total solar installations by 46% in 2022 and 2023, putting more than $52 billion in investments and 100,000 jobs at risk. An independent assessment by Rystad Energy affirmed those findings and estimated that nearly two-thirds of U.S. solar capacity installations for 2022 are at risk. Abigail Ross Hopper, SEIA's CEO, said the case is "destroying clean energy" in America.

Solar companies and their employees are already feeling the squeeze. Mike Kruger, executive director of the trade group Colorado Solar and Storage Association, said recently that “there will be legit layoffs because people won’t be able to build projects.” Two-thirds of respondents to SEIA’s survey reported that at least half of their workforce was at risk of being laid off; another third said that their entire workforce was facing layoffs.

We need Congress to act now and pass the historic $555 billion in clean energy and climate investments. This leadership will bring clean energy manufacturing to the United States. Yet, solar projects cannot wait. We must continue to build solar energy even as we onshore more clean energy manufacturing. The four countries in question supply roughly 80% of all solar modules used in the U.S, and it will take years to grow domestic industry to meet that demand.

Commerce Secretary Gina Raimondo must exercise her authority to intervene against this damaging tariff petition and issue an expedited preliminary determination to stop the probe before it inflicts any further harm to the American economy, and President Biden’s clean energy agenda.

The Climate Implications Are Staggering

President Biden ran and won on a historically ambitious climate platform, including commitments to reaching 100% clean electricity by 2035. Achieving a carbon-free electric grid is critical to reducing greenhouse gas pollution in this major sector and throughout the rest of the American economy. And to meet that goal, annual U.S. solar deployment will need to double every year throughout the 2020s, and then triple historical maximums in the 2030s, according to UC Berkeley's 2035 Report.

But Commerce’s investigation poses a grave threat to the president’s clean energy agenda, and new tariffs on the targeted countries would sabotage progress on this clean power transformation, and the country’s chance to avert runaway climate change. Utilities have already announced that they will be keeping online coal power plants that had been slated to close, in the face of a solar panel shortage.

That is why Evergreen joined with the Sierra Club, League of Conservation Voters, Rewiring America, and several other environmental organizations in writing to Commerce Secretary Gina Raimondo urging her to resolve this issue as swiftly as possible. Secretary Raimondo must intervene now to prevent a truly catastrophic outcome for the climate.

We joined @Earthjustice, @LCVoters, @rewiringamerica, @RockyMtnInst, and @SierraClub in sending a letter to @SecRaimondo calling on her to act quickly to resolve the solar tariffs case currently threatening to wipe out America’s solar industry. ⬇️https://t.co/jymfrvSTjL
— Evergreen Action (@EvergreenAction) May 12, 2022

Commerce Can and Must Act Now

Secretary Raimondo has the authority to issue a preliminary determination in the investigation this month, in May 2022.

Auxin Solar is hoping for an affirmative determination that would impose steep tariffs on solar panels from these 4 nations. This would mean Commerce requiring importers to pay antidumping and countervailing duties on the solar cells and modules entering the U.S., retroactively, after April 1, 2022, and moving forward. According to statute, Evergreen Action is joining SEIA, the International Union of Operating Engineers, American Council on Renewable Energy, and many domestic solar companies to call for Secretary Raimondo to swiftly issue an expedited preliminary determination. It is well within Commerce’s jurisdiction, capacity, and the merits of the case, for Commerce to meet this goal. Failure to do so will continue to inflict major harm to America’s economy and the Biden administration’s own clean energy agenda.

As set out in Section 781(b)(1) of the Tariff Act, the Commerce Department must investigate the following five issues during the administrative proceedings:

“Whether the merchandise is of the same class or kind as merchandise subject to an Antidumping (AD) or countervailing duty (CVD) order,
Whether the imported merchandise is subject to an AD or CVD order,
Whether the merchandise only undergoes minor or insignificant processing in the third country
Whether the value of the merchandise produced in the country subject to the AD or CVD order is a significant portion of the total value of the merchandise exported to the United States, and
Whether Commerce determines that such an anti-circumvention inquiry would be appropriate to prevent evasion.”

American solar industry businesses argue that Auxin Solar’s case fails to meet two of the five mandatory elements, and therefore the circumvention ruling petition should be rejected. They contend that:

Solar cell “processing” in a third country (i.e. production, assembly, and completion of crystalline silicon photovoltaic (CSPV) cells and module manufacturing in Cambodia, Malaysia, Thailand, and Vietnam) is not minor or insignificant. SEIA and other renewable energy organizations note that the Department of Commerce, the U.S. Customs and Border Protection, and the U.S. Trade Commission have established that the “development of the parts in question are essential to imported cells and modules.” Auxin itself has elsewhere testified that the process of cell-making is “capital intensive and technologically sophisticated”—a production stage that’s neither minor nor insignificant. For those reasons, SEIA argues, Auxin’s complaint fails on the merits.
That the petition request is inappropriate because, among other reasons, it would be catastrophic for the U.S. solar industry, the hundreds of thousands of Americans it employs, and the administration’s efforts to fight the climate crisis. Crucially, the term “appropriate” is not qualified in the Tariff Act, giving the Commerce Department considerable discretion to determine if it is appropriate to take circumvention action.

The solar industry is already facing mass layoffs, and many companies may shut down altogether if the investigation drags on. Commerce has said that it intends to issue a preliminary determination by late August, and may issue a final determination as late as January of next year. But the department has the clear authority to issue a preliminary determination as soon as the anti-circumvention investigation begins. Commerce must heed the call of nearly two dozen Senators and expedite their decision, restoring stability for a vital industry and tens of thousands of workers across the country.

There’s No Time to Waste

Making good on the president’s climate pledges—and averting climate catastrophe—will require rapid deployment of clean energy nationwide. Commerce’s investigation is already slamming the brakes on hundreds of solar installations; an adverse finding would grind the industry to a halt. We are out of time to act on climate, and at a critical moment for clean energy in the U.S. Further delay would be catastrophic. Secretary Raimondo must intervene now.

Commerce has until August 2022 to make a preliminary determination. However, following the filing of the Auxin petition, a 30-day comment period that expired on May 2, 2022, and a two-week period for Auxin’s rebuttals to comments from interested parties, Commerce should have all of the information that it needs to deliver an expedited preliminary determination.