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Update: U.S. Commerce Imposes Tariffs on Chinese Solar Panels

In a highly anticipated announcement that came Tuesday, the Department of Commerce has imposed tariffs in a case that has underscored deep divisions within the American solar industry. American solar manufacturers got the validation they were seeking, but much of the solar industry walked away from Tuesday's announcement with a general sense of relief and a continued sense of caution for what could come next.

The rates it set are for the countervailing duty tariffs that essential measure the level of subsidies and benefits coming from the Chinese government to Chinese crystalline silicon panel manufacturers. By finding export subsidies, critical circumstances will be applied — that means tariffs will be made retroactive, possibly as far back as December 2011.

The level of the tariffs are what drew the most relief. The tariffs will be applied on three levels: 4.73 percent applied to Trina, 2.9 percent to Suntech, and 3.59 percent to all others. That's surprisingly low — many in the industry had been predicting 20-30 percent or even higher.

But now the industry awaits the second of two tariffs -- the antidumping duty. According to John Smirnow, a trade law expert with the Solar Energy Industries Association (SEIA), the level set in the countervailing duty is not an indicator of how the anti-dumping portion of the case may turn out.

During a panel discussion on the trade case at PV America West in San Jose, Calif., on Tuesday morning, Tony Clifford of Standard Solar indicated that many in the industry are “still waiting for the other shoe to drop.” If anti-dumping is found and stiff tariffs are set, it could deepen the growing rift between the American and Chinese solar industries. That could ultimately lead to a relation and a trade war in earnest.

Smirnow also spoke of the growing realization that the industry as a whole must find ways to work together through mutual understanding and negotiations rather than through litigation. One way that could happen is through the Asian-Pacific Economic Cooperative, an influential body that will take up a solar initiative to provide the framework for increased international dialogue.

In the trade complaint filed in October, SolarWorld's American subsidiary and six other solar panel manufacturers claimed that Chinese companies are receiving an unfair level of subsidies from the Chinese government and that they are then dumping their products at below the cost of production into the American market. This, they contend, is stifling solar panel manufacturing in the United States. The case made by the Coalition for American Solar Manufacturing (CASM) has been folded into the growing political narrative that America must reclaim its ability to lead in the global arena of manufacturing and innovation.

On the other side, the Coalition for Affordable Solar Energy (CASE) says that the overriding goal is to make solar energy as competitive as possible. Low-cost Chinese panels have figured prominently in this race to make solar energy competitive with fossil fuels. Panel prices have dropped by 50 percent in just the past year, and that growth has spurred an installation boom that many in the industry feel is unsustainable if prices spike.

Both CASM and CASE issued statements shortly after the announcement.

“Today’s announcement affirms what U.S. manufacturers have long known: Chinese manufacturers have received unfair and WTO-illegal subsidies,” said Steve Ostrenga, chief executive officer of Helios Solar Works in Milwaukee, Wis., a founding manufacturer of CASM.  “We appreciate the Commerce Department’s hard work in bringing these subsidies to light, and we look forward to addressing all of China’s unfair trade practices in the solar industry.”

Jigar Shah, co-founder of CASE, said, “Today’s preliminary determination by the Department of Commerce imposing low tariffs on imported solar cells and modules is a relatively positive outcome for the U.S. solar industry and its 100,000 employees. However, tariffs large or small will hurt American jobs and prolong our world’s reliance on fossil fuels. Fortunately, this decision will not significantly raise solar prices in the United States as SolarWorld has sought. This decision clearly demonstrates that the Commerce Department did not find the Chinese government engaged in massive subsidization, as SolarWorld and CASM claim.”

The American solar industry is also working to revive a popular Treasury grant that is also credited with fueling the recent solar boom. And now the industry is also fending off a growing political push to repeal all federal energy incentives.

We'll continue to update this story as more details become available, plus we’ll follow up with analyst reactions and perspectives on what to expect next. We'll also poll industry participants at this week's PV America for their thoughts on the decision.

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