A group of American solar panel manufacturers is urging the U.S. Commerce Department to impose retroactive tariffs on imports from Vietnam and Thailand, citing a significant surge in shipments amid ongoing investigations into alleged unfair trade practices. The request comes as part of a broader effort by domestic producers to combat what they see as unfair competition from low-priced imports, which have been flooding the U.S. market.
Surge in Imports and Trade Tensions
In May, the Commerce Department launched investigations into the trade practices of solar panel manufacturers in Vietnam, Thailand, Malaysia, and Cambodia. These countries accounted for nearly 80% of U.S. solar panel imports in 2023, with Vietnam leading the pack. American manufacturers, represented by the American Alliance for Solar Manufacturing Trade Committee, allege that these imports are being sold at excessively low prices, benefiting from subsidies tied to China, where many manufacturing plants are based.
As speculation about potential tariffs grew, exports from Vietnam and Thailand to the U.S. surged. In their latest complaint, U.S. producers noted a sharp increase in imports from these countries during the second quarter of 2024. Specifically, imports from Vietnam rose by 39%, while those from Thailand increased by 17% compared to the first quarter. The sharp rise in shipments has raised concerns that these countries are attempting to outpace any potential duties that might be imposed.
Potential for Retroactive Duties
If the U.S. Commerce Department and the International Trade Commission determine that “critical circumstances” exist—such as a deliberate effort to surge exports ahead of tariff imposition—retroactive duties could be applied. These duties could date back 90 days from any preliminary decisions, which are expected in early October.
The stakes are particularly high for Vietnam, which faces the possibility of the heaviest tariffs due to its classification as a non-market economy by the U.S. This designation often results in harsher penalties because the domestic pricing in such economies is not considered reliable. Preliminary estimates suggest that Vietnam’s dumping margins could be over 270%, significantly higher than those of Thailand, potentially leading to steep tariffs if the allegations are upheld.
Impact on the Solar Industry and Future Implications
The push for tariffs aligns with President Joe Biden’s broader agenda to revitalize American manufacturing, particularly in sectors critical to the fight against climate change, such as solar energy. However, the imposition of retroactive duties could disrupt the U.S. solar market, which relies heavily on imports from Southeast Asia to meet growing demand.
Data shows that in the first half of 2024, Vietnam supplied $3.3 billion worth of solar panels and modules to the U.S., accounting for 45% of all U.S. imports. This marks a significant increase from 2023, when Vietnam’s full-year exports to the U.S. totaled $4 billion. The surge in imports, coupled with the potential for hefty tariffs, underscores the complex dynamics at play in the global solar industry.
As the U.S. Commerce Department moves forward with its investigations, the outcome could have far-reaching consequences for both American and Southeast Asian manufacturers. If retroactive tariffs are imposed, they could reshape the competitive landscape of the solar industry, potentially driving up prices and altering supply chains.
Source: Reuters
