In a Presidential Proclamation issued this past weekend, the Trump administration announced it would be increasing tariffs on imported solar cells and modules in the final currently planned year of the safeguard action and eliminate a problematic exemption for bifacial solar panels, which the administration contends has “impaired the effectiveness” of the tariffs.
The proclamation also directed the U.S. Trade Representative to assess whether the safeguard tariffs, established in 2018 under Section 201 of the 1974 Trade Act for a four-year period, should be extended. The tariffs, which started at 30% the first year but were set to decrease 5% annually are currently set to expire in 2022.
Solar panels consisting only of bifacial PV cells were exempted from the import tariffs in June 2019, but in October of last year the USTR said the government had reversed course on the exemption, after coming to the belief that leaving it in place would effectively undercut the objectives of the safeguard measure. Accordingly, the USTR attempted to revoke the exemption on short notice, a decision which the Solar Energy Industries Association and a number of U.S. solar companies immediately challenged.
In December 2019, the U.S. Court of International Trade ruled to uphold the tariff exemption for bifacial solar modules, after having determined that the USTR had not provided adequate notice and time for the public or interested parties to comment.
Following its midterm review of the tariffs in February 2020, the U.S. International Trade Commission concluded that “the exclusion of bifacial modules from the safeguard measure will likely result in substantial increases in imports of bifacial modules if such exclusion remains in effect” and that these bifacial modules would compete with domestically produced CSPV products and “apply significant downward pressure on prices of domestically produced CSPV modules.”
Modification of CSPV Safeguard Order
As a result of the proclamation, modifications have been made to the safeguard orders covering imports of CSPV cells under Harmonized Tariff Schedule subheading 8541.40.6025 and other CSPV products, such as modules under HTS subheading 8541.40.6015.
The proclamation revokes the exemption from the tariffs for bifacial modules and adjusts the duty rate of the safeguard tariff for the fourth year of the safeguard measure to 18% instead of the previously scheduled rate of 15%.
Modifications to the safeguard order are set to take effect on October 25, 2020.
It should be noted, however, that the move is still open to legal challenge. In a statement, the SEIA suggested that “[a]spects of this policy may also run counter to law” and vowed it will “consider every option” to reverse the administration’s “harmful approach... that counters critical needs of our country right now, jeopardizing jobs, economic recovery in the face of a pandemic and a clean environment.”
Need More Information?
Should you have any questions about the impact of this proclamation on your imports or other aspects of the safeguard measure on various solar energy products, don’t hesitate to contact one of our knowledgeable trade experts.