September 8, 2022

Understanding the Current Solar Tariffs

What It Means & How It Affects Solar

For home and business owners interested in going solar, there’s quite a bit of confusion regarding tariffs on solar modules and what they mean for the average person. We’ve created a brief primer to explain the catalysts for current solar tariffs and how they’re expected to affect the solar installation landscape in the coming years.

An Anti-Dumping Investigation

The latest changes in tariffs are a response to an investigation by the Department of Commerce into whether solar modules manufactured in Vietnam, Thailand, Malaysia, and Cambodia are being “dumped.” The anti-dumping investigation is intended to determine whether the imported modules are being sold more cheaply in the U.S. than in the countries in which they were manufactured. It’s also meant to circumvent tariffs on Chinese goods in order to reduce competition.

While the investigation continues, the Biden administration has announced a 24-month tariff exemption on these foreign-manufactured modules and invoked the Defense Production Act for solar manufacturing in the United States. The Defense Production Act essentially allows the White House to coordinate with industries when it's considered to be in the interest of national defense. In this case, the DPA is being invoked to expand the manufacturing of solar panel components within the U.S. It will allow the Department of Energy to provide support to domestic solar manufacturers.

The Reasoning Behind Tariff Suspension

The opening of the DOC investigation had immediate effects on the solar industry, with 42% of the utility-scale solar development pipeline seeing disruptions. These disruptions trickled down into the residential and commercial sectors and pose a significant threat to the administration’s goals of reducing greenhouse gas emissions to 50% of 2005 levels by 2030.

The industry reaction to the DOC investigation was an assumption that it will find against the solar manufacturers and that the DOC could retroactively impose tariff collection — so the administration’s action eliminates that possibility and keeps the solar supply chain going.

Pairing the Defense Production Act with the tariff suspension is a way to keep building out progress on the solar transition while reducing U.S. reliance on foreign-made solar panels.

Tariffs Remaining in Place

For solar imports outside the four countries now exempted, Section 201 tariffs on solar cells remain in place. Section 201 was imposed in 2018, with a 30% tariff on goods that decreased by 5% each year. In February, the annual tariff rate quota was raised from 2.5 gigawatts to 5 gigawatts, although bifacial panels are excluded. The extension also allows the U.S. to import solar materials from Canada and Mexico, although those countries account for less than 1% of imports overall.

The Bottom Line

The recent changes to solar import tariffs are meant to provide a bridge as the United States ramps up domestic production of solar panels. That’s good news for anyone interested in switching to solar because it protects against shortages and price fluctuations for consumers.

If you’d like to learn more about solar tariffs and how to secure high-quality solar panels and installation services, turn to Simply Solar. Call us at (707) 285-7037 or contact us online to learn why now is the best time to go solar.

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