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Chinese Solar Manufacturers Dodged U.S. Tariffs, Probe Finds

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WASHINGTON—Four leading Chinese solar-cell manufacturers circumvented U.S. tariffs by routing some of their operations through Southeast Asia, a Commerce Department investigation found, according to people familiar with it.

The preliminary findings from the closely watched probe—expected to be unveiled Friday—are likely to accelerate importers’ race to find alternative sources either domestically or from other places abroad to meet soaring demand for solar panels.

The investigation began in March and prompted uncertainty over solar-parts imports, leading to the cancellation of solar projects across the U.S. and intervention by President Biden to ease pressure on the industry.

When the investigation began, Chinese Foreign Ministry spokesman

Wang Wenbin

said Beijing would take “all necessary measures to uphold the rights and interests” of Chinese companies. He noted that the U.S.’s “protectionism” would “disrupt and undermine” the stability of global supply chains and cooperation on climate change.

Trina Solar Science & Technology is among the Chinese companies that were found to have circumvented the tariffs.



Photo:

Xinhua/Zuma Press

The outcome of the probe won’t lead to immediate increases in solar tariffs because in June the president implemented a two-year suspension of duties to give importers time to make adjustments. The suspension applies to solar imports from the four countries covered by the investigation: Cambodia, Thailand, Vietnam and Malaysia.

With the four Southeast Asian countries accounting for roughly 80% of U.S. solar-panel imports, the department’s probe initially caused a significant slowdown in their shipments, leading to delays in solar-farm projects and triggering complaints from federal and state lawmakers and officials.

In addition to the pause of the import duties, Mr. Biden invoked the Defense Production Act to help U.S. suppliers compete with Asian rivals and spur more domestic manufacturing of solar panels.

The Chinese companies that were found to have circumvented the tariffs are BYD (H.K.) Co.,

Canadian Solar

International Ltd., Trina Solar Science & Technology (Thailand) Ltd. and Vina Solar Technology Co., according to the people familiar with the situation. Together, they account for more than half of all solar-cell imports into the U.S.

The companies didn’t immediately respond to a request for comment.

The Commerce Department began its investigation at the request of solar-module manufacturer Auxin Solar.



Photo:

Ian Bates for Wall Street Journal

The department’s decision highlights the challenge the U.S. faces in reducing its reliance on Chinese suppliers as it accelerates its shift to clean energy. U.S. solar installers and developers are facing an acute shortage of solar panels, now caused by new legislation giving U.S. authorities increased power to block imports of goods linked to forced labor practices in China. The shipment disruption has caused delays in solar deployment, threatening to derail the administration’s climate goals.

The Commerce Department began its investigation at the request of San Jose, Calif.-based solar-module manufacturer Auxin Solar Inc. The company said Chinese solar manufacturers were circumventing the import duties on solar products—introduced in 2012 to protect American companies from subsidized Chinese products—by shipping products through Southeast Asia where final assembly takes place.

The probe continued even after the White House introduced the steps to ease its impact.

The department’s decision highlights the challenge the U.S. faces in reducing its reliance on Chinese suppliers.



Photo:

Shao Rui/Xinhua/Zuma Press

Based on information submitted by the companies upon Commerce’s request, the department’s investigators weighed several factors, including whether a majority of investments, manufacturing, and research and developments were conducted in China, before final assembly in Southeast Asia.

The investigators determined the products shipped by the four companies were Chinese-made in totality and thus subject to the tariff rates on Chinese projects.

SHARE YOUR THOUGHTS

What do you find most interesting about the results of the probe? Join the conversation below.

This would subject BYD, which ships products through Cambodia, to a tariff rate of 27% and Canadian Solar, with a facility in Thailand, to 16%. Trina and Vina will face 254% tariffs as the department determined the companies failed to demonstrate their independence from the Chinese Communist Party. Trina’s products are shipped from Thailand, and Vina, a unit of LONGi Solar, uses Vietnam as its shipment base.

Of the eight Chinese companies the Commerce investigators examined, four were found compliant with the tariff rules: Hanwha Q Cells and

JinkoSolar

with bases in Malaysia, New East Solar in Cambodia and Boviet Solar Technology in Vietnam.

The Commerce Department will release the final result of the investigation in May after conducting on-site audits of the companies and gathering public comments, the sources say. The final outcomes may change from those in the preliminary findings, the sources said.

Write to Yuka Hayashi at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


WASHINGTON—Four leading Chinese solar-cell manufacturers circumvented U.S. tariffs by routing some of their operations through Southeast Asia, a Commerce Department investigation found, according to people familiar with it.

The preliminary findings from the closely watched probe—expected to be unveiled Friday—are likely to accelerate importers’ race to find alternative sources either domestically or from other places abroad to meet soaring demand for solar panels.

The investigation began in March and prompted uncertainty over solar-parts imports, leading to the cancellation of solar projects across the U.S. and intervention by President Biden to ease pressure on the industry.

When the investigation began, Chinese Foreign Ministry spokesman

Wang Wenbin

said Beijing would take “all necessary measures to uphold the rights and interests” of Chinese companies. He noted that the U.S.’s “protectionism” would “disrupt and undermine” the stability of global supply chains and cooperation on climate change.

Trina Solar Science & Technology is among the Chinese companies that were found to have circumvented the tariffs.



Photo:

Xinhua/Zuma Press

The outcome of the probe won’t lead to immediate increases in solar tariffs because in June the president implemented a two-year suspension of duties to give importers time to make adjustments. The suspension applies to solar imports from the four countries covered by the investigation: Cambodia, Thailand, Vietnam and Malaysia.

With the four Southeast Asian countries accounting for roughly 80% of U.S. solar-panel imports, the department’s probe initially caused a significant slowdown in their shipments, leading to delays in solar-farm projects and triggering complaints from federal and state lawmakers and officials.

In addition to the pause of the import duties, Mr. Biden invoked the Defense Production Act to help U.S. suppliers compete with Asian rivals and spur more domestic manufacturing of solar panels.

The Chinese companies that were found to have circumvented the tariffs are BYD (H.K.) Co.,

Canadian Solar

International Ltd., Trina Solar Science & Technology (Thailand) Ltd. and Vina Solar Technology Co., according to the people familiar with the situation. Together, they account for more than half of all solar-cell imports into the U.S.

The companies didn’t immediately respond to a request for comment.

The Commerce Department began its investigation at the request of solar-module manufacturer Auxin Solar.



Photo:

Ian Bates for Wall Street Journal

The department’s decision highlights the challenge the U.S. faces in reducing its reliance on Chinese suppliers as it accelerates its shift to clean energy. U.S. solar installers and developers are facing an acute shortage of solar panels, now caused by new legislation giving U.S. authorities increased power to block imports of goods linked to forced labor practices in China. The shipment disruption has caused delays in solar deployment, threatening to derail the administration’s climate goals.

The Commerce Department began its investigation at the request of San Jose, Calif.-based solar-module manufacturer Auxin Solar Inc. The company said Chinese solar manufacturers were circumventing the import duties on solar products—introduced in 2012 to protect American companies from subsidized Chinese products—by shipping products through Southeast Asia where final assembly takes place.

The probe continued even after the White House introduced the steps to ease its impact.

The department’s decision highlights the challenge the U.S. faces in reducing its reliance on Chinese suppliers.



Photo:

Shao Rui/Xinhua/Zuma Press

Based on information submitted by the companies upon Commerce’s request, the department’s investigators weighed several factors, including whether a majority of investments, manufacturing, and research and developments were conducted in China, before final assembly in Southeast Asia.

The investigators determined the products shipped by the four companies were Chinese-made in totality and thus subject to the tariff rates on Chinese projects.

SHARE YOUR THOUGHTS

What do you find most interesting about the results of the probe? Join the conversation below.

This would subject BYD, which ships products through Cambodia, to a tariff rate of 27% and Canadian Solar, with a facility in Thailand, to 16%. Trina and Vina will face 254% tariffs as the department determined the companies failed to demonstrate their independence from the Chinese Communist Party. Trina’s products are shipped from Thailand, and Vina, a unit of LONGi Solar, uses Vietnam as its shipment base.

Of the eight Chinese companies the Commerce investigators examined, four were found compliant with the tariff rules: Hanwha Q Cells and

JinkoSolar

with bases in Malaysia, New East Solar in Cambodia and Boviet Solar Technology in Vietnam.

The Commerce Department will release the final result of the investigation in May after conducting on-site audits of the companies and gathering public comments, the sources say. The final outcomes may change from those in the preliminary findings, the sources said.

Write to Yuka Hayashi at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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