Fluctuating solar and wind import tariffs

Fluctuating solar and wind import tariffs

June 16, 2020 | By Keith Martin in Washington, DC

Changes in US import tarrifs remain a constant risk in the Trump era.

US companies paid more than twice the import duties last year that they paid in 2017. The figures are for the US government’s fiscal year that runs through September 30. Most of the increase comes from tariffs imposed on imported goods from China.

Bi-facial solar panels remain exempted from the 20% “safeguard” tariff that the United States is collecting on most imported solar panels, but possibly not for much longer. A hearing is scheduled for June 17 in the US Court of International Trade.

The US Trade Representative exempted bi-facial panels from the safeguard tariff in June 2019 and then tried in October 2019 to walk back the exemption.

The US Court of International Trade granted a preliminary injunction on December 5 blocking removal of the exemption on grounds that the US Trade Representative did not follow proper procedures to withdraw it. (For earlier coverage, see “Solar and wind tariffs” in the December 2019 NewsWire.)

The government tried to cure the defects by issuing another notice in April.

On May 27, the trade court said there were still problems and declined to remove the injunction. The court said it takes no position on whether the exemption is warranted, but “merely continues to require the government to follow its own laws when it acts.”

The US Trade Representative tried again to cure the procedural defects with another notice on June 12.

Even if the preliminary injunction is lifted, it may not be the last word. Courts grant preliminary injunctions as a way of freezing the status quo until they can hear the case on the merits. The court said in its latest ruling on May 27 that the government “has not met its burden of showing sufficiently changed circumstances” to warrant lifting the preliminary injunction.

Bi-facial solar panels are more expensive than regular panels, but generate roughly 30% more electricity.

Meanwhile, the US Department of Commerce launched an investigation on May 19 that may lead to tariffs on imported electrical transformers and their components. The affected components are laminated steel used to make cores, wound cores and transformer regulators.

The US has been collecting a 25% tariff on imported steel and a 10% tariff on imported aluminum since March 23, 2018 on grounds that the metal imports are a threat to US national security.

The investigation comes at the request of US steel manufacturer Cleveland-Cliffs Inc., which makes electrical steel. The company accuses other countries of evading the existing steel tariffs by sending electrical steel through Canada and Mexico, where it is incorporated into downstream products like transformer cores that are shipped to the United States.

The US removed tariffs on steel and aluminum imports from Canada and Mexico in part to secure Congressional support for the new US-Mexico-Canada trade agreement.

The Commerce Department has until February 13, 2021 to complete the investigation. If a national security threat is found, the president will have another 90 days after that to take action. (For more detail, see “Possible transformer tariffs under review” on www.projectfinance.law.)

Separately, the Trump administration launched a so-called section 301 investigation on June 2 that may lead to tariffs on nine countries and the European Union in retaliation for taxes those counties plan to collect from digital services providers like Amazon and Google.

The potentially affected countries are the United Kingdom, Spain, Italy, Turkey, India, Brazil, Indonesia, Austria and the Czech Republic, plus the European Union.

The tariffs would apply only to specific goods to be identified in the future.

The US has already decided to impose tariffs of up to 100% on French goods like make up and wine, but has delayed launching them while negotiations are ongoing through the Organization for Economic Cooperation and Development over a possible multilateral approach to digital services taxes. The OECD hopes that an agreement can be reached on the taxes by October 2020.

A number of other countries are also considering such taxes, including Hungary and The Philippines.

Section 301 is the same trade statute that President Trump invoked to impose blanket tariffs on most Chinese goods as he ramped up pressure in 2019 on China. Tariffs may be imposed where another country violates US trade agreements or engages in acts that are “unjustifiable” or “unreasonable” and burden US commerce.

The Commerce Department is investigating whether tariffs should be imposed on national security grounds on imported mobile cranes after the Manitowoc Company in Wisconsin complained that it is being harmed by increased competition from crane manufacturers in Japan, Germany and Austria.

Finally, there is still no word from the administration about the results of a mid-term review of the 20% “safeguard” tariff being collected on most imported solar panels. The tariff, which has been in place since early February 2018, is supposed to remain in place for four years. Suniva urged the administration as part of a required mid-course review after two years to slow down the rate at which the tariffs are decreasing from 5% to 1% a year. (For more detail, see “Solar and wind tariffs” in the December 2019 NewsWire.)