U.S. Deals Trina Another Blow As It Raises Tariffs On Chinese Imports

The U.S. Commerce Department has imposed additional anti-subsidy duties on Chinese solar imports. According to the new findings, Trina Solar (NYSE:TSL) will be subject to a 5.81% tariff on solar imports from China, more than 1% higher than the 4.72% tariff announced in March. ^[1] In addition to this, the Commerce Department has also imposed anti-dumping duties as high as 250% on Chinese solar imports.

Trina Solar could also be subject to countervailing duties up to 31.14%, according to a preliminary ruling on May 17. ^[2] The final decision on the imposition of tariffs will be taken in October. The U.S. is an important market for Trina Solar and the threat of duties could impact its price competitiveness.

We have a $7.8 price estimate for Trina Solar, which is at a 25% premium to its current market price.

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Additional tariffs

The U.S. Commerce Department took a step to increase tariffs on Chinese solar equipment after unearthing additional state subsidies benefiting solar manufacturers in the country. ^[1] Chinese solar manufacturers have aggressively cut prices over the last year to counteract falling demand from key markets in Europe. The low prices have raised questions over the unfair government support enjoyed by solar manufacturers in China, prompting a coalition of American solar manufacturers to file a complaint with the Commerce Department. The Department has responded with anti-subsidy duties and other penalties on Trina Solar and other Chinese companies, which will be finalized in October.

Despite the imposition of tariffs, Chinese players are still keen on competing in the U.S. market. Panel sales in the U.S. are showing strong growth, spurred by a drop in solar energy cost and other incentives. Trina Solar has already indicated that it was considering moving manufacturing to places outside China to circumvent the duties. However, the company’s results in the past quarter have already been impacted by provisions for the duties, which are resulting in another burden as the industry continues to suffer from low margins.

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1. Tariffs on Solar-Gear Imports From China Raised by U.S., Bloomberg [↩] [↩]
2. US Department of Commerce announced preliminary countervailing duty for solar imports, Solar Plaza [↩]