Tariffs remain a significant hazard for developers who must commit to supply electricity at fixed prices only to have the US slap an import tariff on key equipment before the project can be built.
The US Trade Representative granted an exemption from solar panel tariffs for bi-facial panels that absorb sunlight from both sides of the panel in June after a 16-month process. First Solar, Hanwha and Suniva began pushing promptly to have the exemption cancelled. There is risk that the exemption may be rolled back. US solar developers are urging the government to focus instead on guidance to prevent the exemption from being claimed more broadly than intended: for example, by limiting it to panels that are specially designed to receive light from both sides and by requiring a bi-faciality ratio of at least 50%.
Some US developers have switched equipment sourcing from Chinese suppliers to other suppliers in places like India and Vietnam after the US imposed steep tariffs on Chinese products. President Trump told Fox Business Network host Maria Bartiromo in June, “A lot of companies are moving to Vietnam, but Vietnam takes advantage of us even worse than China.” The US is concerned about transshipments from China to avoid tariffs on Chinese products. US imports of solar cells from Vietnam jumped 656% in June from a year ago. Solar panel exports from China to Vietnam were $739 million in Q1 2019 compared to $0 a year before.
The US Treasury added Vietnam to a watch list of countries in May that are being monitored for possible currency manipulation.
The US announced on May 31 that it was rescinding an exemption that India has enjoyed from US import tariffs on solar panels. The rescission took effect five days later on June 5.
The US had put India on notice on March 4 that it was planning to revoke India’s status as a beneficiary developing country under the generalized system of preferences (GSP) program. GSP beneficiaries are exempted from the US solar tariffs as long as their solar panel exports to the US do not amount to more than 3% of total US panel imports and as long as all developing countries whose individual exports are less than 3% each do not collectively account for more than 9% of total US panel imports.
The US is in the preliminary rounds of imposing anti-dumping duties, countervailing duties or both on wind towers imported from Canada, Vietnam, South Korea and Indonesia. The Commerce Department has an investigation underway into whether such towers are being dumped in the US at prices below fair value or are benefiting from unfair subsidies. The US International Trade Commission is looking separately into whether domestic wind tower manufacturers are being injured. Preliminary anti-dumping and countervailing duty determinations could come as early as year end.
Meanwhile, in July, the Trump administration rebuffed for now a request by two US uranium mining companies to impose a quota on uranium imports. Federal agencies are looking for other ways to help domestic mining companies. The mining companies wanted a quota requiring at least 25% of domestic uranium consumption to be met by US producers. At present, 93% of US uranium used is imported. The largest suppliers are Canada, Australia and Russia.