The Biden administration has sought to balance solar power imports with domestic renewable energy manufacturing.
Earlier this week, S&P Global Market Intelligence reported pointed out Solar PV imports from Thailand and Vietnam surged to a record 17.4 gigawatts in the second quarter of 2024 amid expected U.S. tariff announcements.
this is Unexpected news.
These countries, along with Malaysia and Cambodia, make up the Southeast Asian group that has been accused of being a bargaining chip for Chinese solar companies that are heavily subsidized by American manufacturers in 2022. Chinese solar companies are taking advantage of these countries. Avoid The United States imposed tariffs on solar imports from China. U.S. manufacturers complained to the Department of Commerce, which investigated and Almost confirmed the claim.
But before that decision is made, President Biden Two-year moratorium The resulting tariffs were rejected by Biden in Congress as a way to overturn them, and the recent reported surge in imports occurred as American solar developers scrambled to import cheaper materials as the moratorium neared its end.
The impact of tariffs will take time to be reflected in trade flows, capital allocation and other corporate decisions, but the impact of higher tariffs goes beyond this surge. Starting this week The article points out that many Chinese solar power companies operating in Southeast Asia are scaling back their operations in the region as tariffs have significantly reduced their profits as an export platform to the United States, and argues that “Chinese solar power companies are also struggling with a worsening domestic oversupply, with many smaller companies already going bankrupt.”
But domestic overcapacity and high bankruptcy rates for many Chinese companies are costs China is willing to pay to dominate the solar sector. “Beijing has demonstrated a high tolerance for companies stumbling and going bankrupt en masse,” a recent analysis explains. The New York Times:
Solar manufacturers across China are laying off thousands of employees to cut costs, but those workers may be among the lucky ones because they’re eligible for a few months of severance pay. Other major solar companies are resorting to tactics like offering a year of unpaid leave or taking a 30 percent pay cut for employees who keep their jobs.
But some companies say they are laying off workers only to prepare for further production expansion in the future. “We’re saying, ‘Come back to the farm, help with the harvest, and come back in the fall when we have new equipment,'” said Zhang Haimeng, group vice president at LONGYI.
American solar manufacturers continue to litigate against these circumventionist imports. In addition to the lawsuit that led to the moratorium, the Commerce Department in May filed a petition seeking additional anti-dumping and countervailing duties on products from these four countries, which is currently under investigation. In addition, domestic manufacturers have ‘Critical situation’ The suspicions about the sudden increase in imports If supportedwould impose retroactive duties on importers.
Meanwhile, the Biden administration continues to juggle two promises: to promote renewable energy and to manufacture renewable energy domestically. Doubling of tariffs Importing solar power from China Just Announced It increased the quotas on imports that could be brought in duty-free.
Either way, Chinese solar companies are now looking beyond Southeast Asia for investment, with one just announcing a nearly $1 billion deal to build a factory in Saudi Arabia. Reuters explains “The latest in a series of renewable energy deals between China and Saudi Arabia.”
All of this shows that trade enforcement is not something you can set and forget: it requires ongoing maintenance, especially when the foreign companies you monitor are backed by nations that are using a whole-of-government approach to promote their industries.
For more information on this approach, here.
