Domestic Energy Production Takes Priority in Washington with Solar Tariff Pause

On June 6, the Biden administration announced it will suspend tariffs for two years on solar panel imports from four countries and invoke the Defense Production Act (DPA) to accelerate production and use the federal government’s purchasing power to increase demand.

Biden’s action comes in response to a Department of Commerce probe into whether Chinese solar manufacturers have been circumventing tariffs by assembling equipment in Cambodia, Malaysia, Thailand and Vietnam. Commerce Department officials said their investigation would continue and that any tariffs that resulted from their findings would begin after the 24-month pause expired. Hundreds of big solar projects in the U.S. have been paralyzed by the investigation with the looming risk of retroactive tariffs potentially adding nearly 20% to project costs, jeopardizing progress to meet government and corporate sustainability commitments. 

Biden also announced authorization for the Department of Energy to use the DPA to rapidly expand American manufacturing of solar panel parts, as well as building insulation, heat pumps, equipment for making and using clean electricity-generated fuels and power grid infrastructure like transformers.

Not all renewable companies are celebrating, including the few U.S. solar manufacturers with concerns the action sends the message that companies can circumvent American laws with deep-pocketed political pressure. There is skepticism on if another round of government funding through the DPA can effectively ramp up U.S. manufacturing to account for the nearly 90% of current solar panel imports, which will likely be a key priority for the administration to point to their success in advance of the 2024 election.
 
Ramping up domestic energy production across all energy sources has become a bi-partisan priority to address energy security, climate risks and job creation in American. House Republicans are set to unveil their conservative road map on climate in the coming weeks, calling to boost domestic fossil fuel production and streamlining the permitting process for large infrastructure projects.