New Tariffs Address Loophole, But With Widespread Ramifications
BMI View : The new tariffs proposed by the US government on Chinese solar panel makers will effectively seal a loophole used by these manufacturers to circumvent tariffs imposed on Chinese solar cells in 2012. These companies will now have to move production of both solar cells and panels overseas in order to avoid tariffs. We believe that US solar manufacturers stand to gain the most from these tariffs, but their gain will be to the detriment of US-based project developers, investors, and consumers.
On June 3 2014, the US Department of Commerce announced its preliminary decision to impose steep import duties on Chinese solar panel makers, asserting that these manufacturers had benefited from unfair subsidies. The key details of the tariffs are as follows:
Preliminary duties of 35.2% and 18.6% would be imposed on imports of Suntech and Trina Solar respectively, while other Chinese solar producers will immediately receive tariffs of 27%.
The duties will be levied on solar photovoltaic (PV) panels and the cells used to make them. This is in contrast to the 2012 tariff, which only affected Chinese solar cells.
US Customs have started collecting cash deposits on imports based on the duty rates, and these deposits will be repaid if the tariffs are not confirmed.
The Commerce Department is still conducting an investigation on the dumping issue (a separate issue from unfair subsidies), and could decide to increase or introduce new tariffs. A decision is due on July 25 2014.
The tariffs will be reviewed by the US International Trade Commission (ITC) in October 2014 before a final decision is made.
This ruling will effectively seal a loophole that Chinese solar manufacturers have allegedly used to circumvent tariffs imposed by the US on Chinese solar cells in 2012, when the US government imposed tariffs of between 18% and 250% on Chinese solar cells ( see 'Changing Dynamics Of Renewables Manufacturers', October 18 2012). However, Chinese producers were able to evade these tariffs by purchasing solar cells or moving their production overseas (with the most common alternative being Taiwan) before shipping these cells back to China for assembly into solar panels. In many instances, the cells manufactured outside of China were derived from components - namely solar ingots and wafers - from China. The new tariffs will mean that Chinese companies will not be able to exploit this loophole any longer, and will have to move production and assembly of both solar cells and panels overseas in order to avoid tariffs.
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