Investigation finds China kept prices low with subsidies, but some in US warn tariff will slow adoption of solar energy

This article is more than 8 years old

This article is more than 8 years old

The Obama administration imposed heavy tariffs on Chinese solar panels on Thursday, after finding that China is flooding the market with government subsidised products.

The preliminary decision, that China had dumped solar products on the US for less than the cost of manufacture, will result in tariffs of between 31% and 250% on Chinese imports.

It was seen on Thursday as a mixed blessing.

US solar panel makers, who brought the original complaint, are expected to benefit. But the tariffs, by forcing up prices, are expected to slow the adoption of solar power more generally.

There were also fears the move could lead to a broader US-Chinese trade war.

In its decision, the US commerce department said it would impose tariffs of about 31% on about 60 Chinese solar panel exporters which participated in the investigation, including Wuxi Suntech and Trina Solar. Other manufacturers will face tariffs of just under 250%. The levies will be retroactive for 90 days.

The tariffs were in addition to fees ranging from 2.9% to 4.73% imposed last March.

Chinese government subsidies helped drive down the price of solar panels by 80% over the last five years, and by 40% in the last year alone. The price drops drove some US solar panel makers – such as Solyndra – to collapse.

The seven US-based solar panel makers which brought the complaint said the ruling from the commerce department would help American companies hold their own against Chinese competitors. The solar panel makers were struggling against Chinese competition, and weakening demand in Europe.

"Today's decision is expected to have an impact on the US marketplace for Chinese manufacturers since it will begin to remove the advantage they have had as a result of their illegal trade practices," the Coalition for American Solar Panel Manufacturing said in a statement. The statement went on: "However, it will not disrupt solar growth or solar installations in the United States."

But that is precisely the fear of other industry analysts. The falling costs for solar panels also made solar power more competitive with other sources of energy. The US solar industry grew by 109% last year.

Jigar Shah, who heads the Coalition for Affordable Solar Energy, told reporters Thursday's ruling will mean higher prices for consumers and will set back the adoption of solar.

He also warned that China might retaliate against American manufacturers, sparking a trade war. Chinese officials have protested in the past at American accusations of unfair pricing and threatened to take America to the international trade court or WTO.

"We think it's raising taxes 31% on solar cells, and we think it's going to increase solar electricity prices in the US precisely at the moment that solar power is becoming competitive," Shah said.