U.S. to Remove Tariffs for Two Years on Solar Panels Hit by Investigation

Biden is expected to announce a 24-month tariff exemption for solar panels imported from four Southeast Asian nations after a probe froze imports and delayed projects in the United States.

The Commerce Department has been investigating whether imports from Cambodia, Malaysia, Thailand and Vietnam are circumventing tariffs on Chinese made goods.

The companies have been worried over the potential impact of the probe and Biden’s move is expected to ease companies’ fears about having to hold billions of dollars in reserves to pay potential tariffs.

The Biden administration aims to put a safe harbor timeout on the collection of duties to ensure stalled solar projects to go forward.

The administration has also been working on the Defense Production Act (DPA) to drive U.S. manufacturing of solar panels and other clean energy technologies in the future, with the support of loans and grants.

State governors, lawmakers, industry officials and environmentalists have expressed concern over the investigation, which could have led to retroactive tariffs of up to 250 percent.

The issue has caused a dilemma for the White House as it tries to show leadership on fighting climate change partly by encouraging the development of renewable energy projects, while keeping its distance from the investigation proceedings.

Biden wants to take advantage of the tools available to him, including executive action and invoking the DPA, without stepping on the inquiry of the Commerce Department.

Tariffs could be levied on panels imported after the 24-month period, but the threat of retroactive payments would be off the table. So if a company brings in the imports during the 24-month period, there will not be additional duties regardless of the outcome of the probe.

Half of U.S. solar panel supplies and 80% of imports have been halted because of the investigation.

Clean energy groups have said the investigation disrupted the industry, and some of them have asked Commerce Secretary Raimondo to dismiss it.

The industry thinks the two year exemption window could help the sector return to rapid deployment while the DPA could help grow the domestic solar manufacturing.

The investigation was announced at the end of March and could take 150 days to complete.

Biden has previously invoked the DPA to tackle a shortage of infant formula in the United States, ramp up domestic output of key minerals for electric vehicle batteries, and fight the COVID-19 pandemic through tests and vaccine production.

Boosting renewable energy output, including solar, is crucial for Biden’s target of cutting greenhouse gas emissions by 50% to 52% by 2030 as well as decarbonizing the U.S. power grid by 2035.

The Commerce Department probe has so far prompted 19 state governors, 22 U.S. senators, and dozens of members of the House of Representatives to express concern in letters to Biden.

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