WASHINGTON — U.S. officials have determined that four of eight major Chinese solar companies under investigation in recent months attempted to evade tariffs by funneling products into the United States through Southeast Asian countries, in a trade case that has pitted clean energy proponents against domestic solar panel manufacturers.
The decision applies to the Thailand operations of Canadian Solar and Trina Solar, as well as BYD Cambodia and Vina Solar Vietnam, according to a decision published on the Department of Commerce website Friday morning.
The investigation, initiated at the request of a small California-based company named Auxin Solar, centered on whether Chinese companies have been trying to bypass tariffs that the United States imposed on cheap solar panels imported from China. In recent years, Chinese solar companies have significantly expanded their manufacturing presence in Southeast Asian countries that do not face the same tariffs.
The trade case rests on whether the Chinese companies are actually using these Southeast Asian countries as a significant site of manufacturing, or if they are just making minor changes to products that are largely made in China to try to get around U.S. trade rules.
Other companies that were also under investigation — namely New East Solar Cambodia, Hanwha Q CELLS Malaysia, Jinko Solar Malaysia and the Vietnam operations of Boviet Solar — were found not to be violating U.S. trade rules.
Companies that import solar products into the United States — including major U.S. installers, as well as the U.S. branches of Chinese solar companies — have protested the investigation, saying that it is preventing them from importing enough material to meet growing demand for clean energy solutions. They have lobbied the Biden administration and lawmakers to argue that the trade case will prevent the United States from meeting its ambitious climate goals. President Biden has pledged to cut greenhouse gas emissions by 50 percent, compared to 2005 levels, by the end of the decade.
In 2020, 89 percent of the solar modules used in the United States were imported, with Southeast Asian countries accounting for the bulk of the shipments.
Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, which opposed the investigation, said the group was “obviously disappointed that Commerce elected to exceed its legal authority,” arguing that cell and module manufacturers were significantly transforming their products in Southeast Asia.
“This decision will strand billions of dollars’ worth of American clean energy investments and result in the significant loss of good-paying, American, clean energy jobs,” she said, adding, “This is a mistake we will have to deal with for the next several years.”
The results of the investigation also appear likely to incite criticism from Republicans and domestic industry that the Biden administration is failing to crack down on China for unfair trade behavior.
The Biden administration decided in June to halt any tariffs resulting from the investigation, regardless of the ruling, for a period of two years in order to ensure the United States has a sufficient supply of solar panels to fuel the energy transition and mitigate climate change.
The Biden administration has targeted a goal of generating 100 percent of the nation’s electricity from carbon-free sources such as solar, wind or nuclear power by 2035, up from only 40 percent in 2020, a goal that may require more than doubling the annual pace of solar installations.
In a statement Friday, the Coalition for a Prosperous America, a group that promotes American manufacturing, called for the Biden administration to withdraw its emergency declaration that had neutralized the result of the investigation, and to enforce U.S. trade laws instead.
Mr. Biden’s declaration “gives Chinese manufacturers a free pass to illegally” bypass U.S. trade laws for 24 months and protects them from retroactive duties, the coalition said.