Biden Administration Paves the Way for Solar Panel Imports
June 17, 2022
As of February 2022, President Joe Biden extended tariffs that the Trump administration placed on solar panel imports. However, the range of solar products that the tariffs affect is reduced.
The decision involves a tariff decrease from 30% to between 14% and 15% on imported crystalline silicon solar products for the next four years. Although bifacial solar panels are exempt from levies, the U.S. will accept double the amount of solar imports than what was previously permitted.
These changes create a greater balance between foreign and domestically manufactured solar products that American consumers purchase.
A Little Background
Former President Trump instated a safeguard tariff on solar cells in January of 2018. The tariff was set at 30%. This meant imported solar panels saw a 30% increase in tax, although it was designed to decrease by 5% each year afterward.
Tariffs are a logical way to generate revenue for the government, but they also encourage more products to be made domestically (supporting American companies) rather than imported from abroad.
However, most American solar installations are sourced from Asia because China is the world’s largest solar panel manufacturer. This made the Trump administration’s tariff less than ideal for Americans going solar. Fewer solar products were available in the American market because of the tariff, and they also cost more than Chinese solar products.
Once Biden took over in January 2021, the U.S. International Trade Commission (USITC) recommended that his administration keep Trump’s solar tariff. The USITC believed keeping the tariff at the same level would prevent harm to the U.S. solar industry.
What Does Biden’s Tariff Change Mean?
Because Biden loosened the 30% tariff on solar equipment to 14% to 15% and doubled the allowed import number, consumers will have a wider range of options when purchasing equipment to go solar.
In other words, the U.S. will accept a larger number of solar panel components from foreign solar manufacturers, specifically in China, with fewer taxes placed on them.
This is an important move by Biden because it lowers the hurdle to transition to clean energy at a time when sustainable sources are needed more than ever. In an attempt to curb climate change, the eased tariffs make moving to clean energy more feasible.
The Biden administration also said it’s starting talks with Mexico and Canada to allow imported duty-free products from them, or in other words, without any taxes at all. In addition, the administration is exempting a certain type of panel — bifacial — from the tariff (i.e., taxes, levies).
The exempt bifacial solar panel is two-sided and helps ensure U.S. solar generation continues at the pace needed to meet Biden’s clean energy target. This is because bifacial panels can produce more solar power than traditional one-sided panels within the same amount of time.
[Related: Guide to Solar Panels]
How Do American Solar Companies Feel?
Many American solar manufacturers are less than enthused after learning Biden’s changes keep the import tariffs high. This sentiment goes for companies that build their panels and other system equipment domestically. Other companies are only installers and providers, not manufacturers. They order their equipment from abroad, primarily from China.
Some companies worry that the tariffs (even when lowered) prioritize China’s solar efforts rather than American supply chains. Here are their primary areas of concern:
- Risk to billions of existing investments
- Thousands of solar industry jobs
- America’s energy security
- Climate-critical transition to clean energy
- Further harm (e.g., bankruptcy) to American solar companies
However, Biden pledged to cut U.S. carbon emissions by at least 52% of what they were in 2005. The White House is aiming for the U.S. to be carbon-free by 2035 and net zero by 2050. But to do that, solar and wind must replace a large portion of traditional electricity production.
This is why the administration lowered tariffs for solar, despite the negative impact doing so may have on solar manufacturers.
Thinking Forward Means Going Solar
American solar manufacturers will likely struggle to compete with China’s mass production of lower-cost solar equipment. But the Biden administration is set on making solar more accessible to American consumers, which means accepting imports to increase the number of available solar products in the U.S.
This is essential, especially as the national demand for solar surges. And even now, American solar manufacturers have only 20% of the production capacity needed for the nation’s installations. In other words, our solar industry needs a boost, and we’re getting it from China.
The Biden administration believes satisfying national clean energy goals is more important than improving the country’s domestic solar industry. However, the administration isn’t just standing back and watching as American solar manufacturers struggle.
Biden approved a bill devoting about $300 billion toward scientific solar research in February 2022. This bill includes $600 million in grants and loans for domestic solar manufacturing.
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Featured image via Unsplash