US Finalizes Tariffs On Chinese Solar Firms, But Benefits For American Firms Dubious

The US International Trade Commission (ITC) has voted unanimously to uphold countervailing and anti-dumping duties on Chinese solar products, confirming the US Department of Commerce (DoC) findings that the Chinese firms had flouted WTO rules by selling their panels at below cost and received unfair subsidies from the Chinese government, thereby causing harm to US manufacturers.

The tariffs remain similar to those announced by the the DoC  in its final determination in October, ranging between 24% and 36% for major Chinese manufacturers and up to 250% for smaller players. (See Also:A Rough Road Ahead For Chinese Solar Firms As US Upholds Tariffs) The tariffs on Chinese imports will vary based on the level of subsidies received by each of the Chinese manufacturers. Suntech Power will face a dumping margin of about 32% while rates for Trina Solar will be around 18%. However, as a relief to companies that had recently purchased solar panels, the commission overturned a provision that called for the collection of retro-active tariffs that would have made the tariffs effective 90 days before the DoC’s initial rulings earlier this year.

The US and China have been embroiled in a bitter trade battle over renewable energy. A few months ago, in response to the US probe, the Chinese government launched an investigation into US polysilicon exports to China.

Benefit For US Firms Remain Dubious

The US has traditionally been a large market for Chinese solar products, having imported an estimated $3.1 billion worth of solar cells from China last year. Given the magnitude of business Chinese firms are doing in the US, it would seem that the tariffs are a blow to firms like Suntech Power (NYSE: STP) and Trina Solar (NYSE: TSL) and a shot in the arm for US competitors like First Solar (NASDAQ: FSLR) and SunPower (NASDAQ:SPWR), but ironically, that may not be the case due to two reasons.

Firstly, the tariffs apply only to Chinese panels and modules that carry photovoltaic cells manufactured inside China. Chinese panels that house cells manufactured abroad will be exempt from the tariffs even if the cells are manufactured with Chinese components. This constitutes a significant loophole and Chinese firms have been quick to exploit this, sourcing cells from countries like Taiwan.

Secondly, the investigation only covers solar products manufactured using silicon technology and excludes thin-film cells like Cd-Te, limiting the potential benefits for firms like First Solar that use this technology. ((US International Trade Administration Fact Sheet))

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