Disagreement Over Effectiveness, Wisdom of U.S. Tariffs on Chinese Solar Cells

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[author: Bingham, Matt]

Since the U.S. Commerce Department's decision to impose anti-dumping tariffs against solar cells manufactured in China, there has been considerable disagreement about the effectiveness of the tariffs, in addition to debate about the broader trade implications of the action.  Media outlets began reporting almost immediately that Chinese solar companies were likely to simply begin buying cells made in nearby markets such as Taiwan and Korea and to continue their remaining manufacturing and panel assembly operations in China.  These reports predicted that the end result would most likely be a minor increase in the price of Chinese solar panels because of the current oversupply in the global market for solar cells.  Last week, one of China's largest solar cell makers, JA Solar, confirmed that it plans to do exactly that (read more here).  However, the Coalition for American Solar Manufacturing (CASM) -- the group behind the complaint to the Commerce Department -- released an analysis this week arguing that the tariffs will be effective and that "toll production" of solar cells in a third country should not allow Chinese companies to avoid the tariffs.

Another important consideration on this issue is the broader implications on trade between the world's two largest economies.  One week after the announcement, China's Commerce Ministry announced that its investigation of six renewable energy projects in the U.S. had found violations of international trade law.  And just this week, it was reported that Chinese polysilicon makers are asking the Chinese government to impose duties on U.S. imports of the material, which is an essential component of solar panels.  All of this has led some observers to label the situation a "Solar Trade War".

Of course, the American solar industry is divided on the tariffs, with developers and some manufacturers strongly opposed.