Solar and wind tariffs
The uncertainty around tariffs makes trying to do business like negotiating deals on a trampoline with an overweight 73-year old bouncing up and down.
The US Department of Commerce recommended in early December that wind towers imported from Canada, Vietnam and Indonesia should be subject to countervailing duties to offset subsidies in the three countries. It recommended duties of 1.09%, 2.43% and 20.29% respectively.
It may recommend additional anti-dumping duties early next year.
US wind tower manufacturers have also complained about towers imported from South Korea. The Commerce duty calculations go next to the US International Trade Commission for confirmation that US manufacturers have been injured by the subsidies.
US Customs will collect cash deposits in the meantime from importers based on the preliminary duty rates.
Roughly $119 million in wind towers were imported from the three countries in 2018, but the first quarter 2019 number was 10 times as large as the first quarter 2018 if South Korea is included in the calculations.
Separately, the US International Trade Commission is expected to report to President Trump by February 7, 2020 on whether to leave in place US tariffs on imported solar panels at the current rates. A tariff of 25% is being collected currently. The rate is scheduled to drop to 20% on February 7, 2020, to 15% a year later in 2021 and then to disappear in 2022. The government is required to do a mid-term review after the tariffs have been in effect for two years. They started at a 30% rate in February 2018.
Some US developers have been importing panels into bonded warehouses. This defers collection of the tariff until the panels are removed from the warehouse for use in a project. The tariff rate is the rate that applies on the withdrawal date.
The US International Trade Commission held a hearing as part of its mid-term review on December 5. Chinese-owned US panel manufacturer Suniva has asked it to slow the annual 5% tariff reduction to 1%. The trade law under which the duties were imposed does not allow Trump to increase the tariff.
Meanwhile, the US Court of International Trade has temporarily blocked a move by the US Trade Representative to withdraw a tariff exemption for bi-facial solar panels that generate electricity on both sides of the panel.
Global bi-facial panel installations were 97 megawatts in 2016 compared to 2,600 megawatts in 2018. They are expected to reach 5,420 megawatts in 2019, according to Wood Mackenzie.
The US Trade Representative exempted bi-facial panels from the current 25% tariff on imported solar panels on June 26 at the request of three companies: Pine Gate Renewables, Sunpreme and SolarWorld Industries. Soon after, Suniva, First Solar and Hanwha Q Cells USA asked him to reconsider. He then revoked the exemption in October, but the US Court of International Trade blocked withdrawal of the exemption after Invenergy filed suit. Invenergy was later joined in the suit by the Solar Energy Industries Association (SEIA), Clearway Energy, EDF Renewables and AES Distributed Energy.
The court issued a preliminary injunction on December 5 to keep the exemption in place until the government can cure procedural defects in how it revoked the exemption.
The court said the government violated the Administrative Procedures Act by giving the public only 19 days’ notice and without collecting public comments or compiling a public record on which to base a decision. The case is Invenergy Renewables LLC v. United States.
The injunction against removal may prove temporary until the government can go through the proper motions.
SEIA is seeking tariff exemptions for solar panels made in Canada and Singapore.
Jinko, a Chinese solar panel manufacturer that opened a factory in the United States, said it expects demand for its solar panels to surge nearly 45% in 2020 to four megawatts. Solar panels have been hard to find in the run up to the December 2019 deadline for starting construction of solar projects to qualify for federal tax credits.
President Trump tweeted on December 3 that he will impose tariffs on all steel and aluminum imports from Brazil and Argentina. Both countries agreed to quotas last year in exchange for a waiver from such duties. Trump accused both countries of “presiding over a massive devaluation of their currencies, which is not good for our farmers.”
No formal proclamation has been issued yet by the White House or the US Department of Commerce.
The US is currently collecting a 25% tariff on imported steel and 10% on aluminum. The President used section 232 of the Trade Expansion Act of 1962 as the legal authority to impose them. That section allows tariffs to be imposed where imports threaten national security.