Solar industry hopes Biden DOJ defense of Trump tariffs is only temporary setback

AdobeStock_198975042.jpeg

The solar industry has long opposed efforts to impose tariffs on imported solar panels and hoped the incoming Biden administration would reverse a Trump-era decision that increased tariffs on solar panels and rescinded an exclusion for two-side solar panels.

That hope took a hit this week when the Justice Department (DOJ) called for the U.S. Court of International Trade to dismiss an industry complaint against the October Trump proclamation.

DOJ wrote in its filing to the court that the solar industry’s argument “fails to set forth a plausible showing that [President Trump’s] determination involves a clear misconstruction of the governing statute, a significant procedural violation, or action outside delegated authority.”

The Solar Energy Industry Association and the American Clean Power Association sent a letter to President Biden in February encouraging him to rescind the Trump administration’s October 2020 solar proclamation increasing tariffs on solar panels and repealing an exemption from the duties for two-sided, or bifacial panels.

A SEIA analysis released in December found the tariffs have so far cost the solar industry 62,000 jobs and $19 billion in lost private sector investment.

There is optimism among the industry that the latest move by DOJ is simply procedural and that Biden will ease the tariffs through other means. After all, President Biden campaigned heavily on clean energy and jobs, and his executive actions since taking office have highlighted the need to address climate change.

Still, the DOJ's move to dismiss the industry's lawsuit adds to the uncertainty that has been building steadily in the industry for more than three years. 

In 2018, Trump targeted China's solar-panel manufacturing sector with a proclamation imposing tariffs on imported solar panels and modules for four years. Trump believed the move would encourage domestic manufacturing by making imported solar panels more expensive. At the time, Trump issued an exemption for bifacial panels.

The solar industry expressed concerns at the time over the potential unintended consequences of the tariffs, warning they were more to likely increase the cost of domestic solar generation and create challenges for existing and new solar contracts. 

In October, Trump increased the 2018 tariffs and rescinded the exemption for bifacial panels, saying they “impaired the effectiveness” of the tariffs.

The tariffs, established under Section 201 of the 1974 Trade Act, are set to expire in 2022.

Solar energy in the U.S has been growing at an incredible rate, even amidst the COVID-19 pandemic. However, that growth relies on an increased number of solar projects, which depend on access to lower costs materials. Solar panels need to be priced competitively to attract price-sensitive commercial and residential customers who may otherwise choose cheaper sources of power like natural gas instead. 

The tariffs have resulted in higher costs for solar energy projects, but they also failed to encourage the modules and panels' domestic production. Instead, groups predicted that the United States would continue to import a majority of its solar panels at a higher cost. 

These higher costs not only affect consumers and utility companies but also affect the overall U.S. economy. The tariffs created uncertainty for investors and caused delays for existing solar energy projects. 

In their letter to President Biden, SEIA and ACPA argued that the tariffs hinder U.S. efforts to address climate change. 

There is still time for the Biden administration to correct the consequences of the tariffs. Most industry analysts consider the new administration to be a strong supporter of solar and other clean energy sources, despite DOJ's filing. 

The case is Solar Energy Industries Association v. U.S., 20-3941, U.S. Court of International Trade (New York).