In anticipation of tariffs that may be levied on solar cell and module imports, foreign solar manufacturers doubled what they shipped to the US in November 2017 compared to November 2016. That's according to trade data seen by The Wall Street Journal.

The trade data reflects that importers hope to take advantage of good market conditions before any tariffs are imposed. And a new report from the International Trade Commission (ITC) released last week suggests their efforts won't be wasted. The new supplemental report offers (PDF) some additional support to the Trump administration if it tries to bring a tariff decision before the World Trade Organization (WTO). Specifically, the report suggests that China "took advantage of the existence of programs implemented by the US government to encourage renewable energy consumption" and that the US couldn't have foreseen that market shift.

The solar cell and module tariffs in question will be decided on or before January 26 by President Donald Trump. The president is permitted to make any tariff decision he pleases if the International Trade Commission (ITC) finds that trade conditions harmed a certain US industry. In September 2017, the ITC made just such a finding, saying that US solar manufacturers had been harmed by cheap foreign imports of solar cells and modules.

Oddly enough, the tariffs are opposed not just by the wider renewable energy industry, but by many Trump-supporting, right-leaning groups. They claim the tariffs would muddy a free market while the industry argues that it has benefitted from being able to sell low-cost panels to residential solar customers.

Determining “unforeseen”

However, even if Trump decides in favor of the most stringent tariffs suggested by the ITC (that is, a 35-percent tariff on all imported solar modules and a four-year, 30-percent tariff on large cells) or if he decides on an even more punitive tariff, Bloomberg notes that such a tariff would have a difficult time getting the approval of the WTO.

In fact, the US has lost every time a tariff decided in a similar fashion has been challenged at the WTO. "[T]o win at the WTO, a company must show it was blindsided by foreign competition that could not have been reasonably foreseen, while the US law only requires companies to show they were harmed," Bloomberg writes.

In December, a US Trade representative for the Trump administration asked the ITC for more information on any unforeseen developments that led to US-based solar manufacturers being harmed by a free trade environment, presumably to rebut any challenge to new tariffs from the WTO on those grounds.

The supplemental report from the ITC answers that request. In it, the ITC argues that the current solar panel trade situation in the US was wholly unforeseen. When cheap solar panels started becoming available, the ITC writes, the US exercised antidumping laws on Chinese manufacturers. The US did this based on the fact that China offered preferential loans and taxes to solar panel manufacturers and provided "polysilicon, land, and electricity for less than adequate remuneration," among other incentives.

But those antidumping measures didn't do much, the ITC says, because the six largest firms that were making cells and modules in China increased their manufacturing capacity in additional countries, especially Korea, Malaysia, Thailand, and Vietnam.

"The large and attractive nature of the US market and the large and growing size of the export-oriented foreign industries caused US imports of [solar cell] products to increase both absolutely and relative to domestic production in each year since 2012, reaching record highs in 2016," the ITC writes.

The commission continues:

US negotiators also could not have foreseen that the US government's use of authorized tools, such as antidumping and countervailing duty measures on imports from China, would have limited effectiveness and instead lead to rapid changes in the global supply chains and manufacturing processes in order to facilitate US imports of non-covered products from China and Taiwan and later US imports from Chinese producers' affiliates in other countries.

Naturally, the primary opponent of solar panel import tariffs, the Solar Energy Industry Association, disagrees with the ITC assessment.

President and CEO Abigail Ross Hopper said in a statement: "This ITC report fails to adequately prove its own conclusion, and we do not see it surviving WTO scrutiny, should it come to that. The current solar market, including its production and trade patterns, was both foreseeable and predicted by experts across the globe."

She added, "What's also been predicted are the inevitable job losses in the US and economic harm if tariffs are imposed on one of the fastest-growing industries in America. We urge the president to put America first and say no to solar tariffs."

For now, the threat of tariffs may be causing the very market conditions that this administration seeks to prevent. Besides increased solar panel imports, the WSJ reports that imports of residential washing machines, steel, and aluminum have all increased considerably in recent months following tariff threats.

After washing-machine maker Whirlpool asked for tariffs similar to those recommended for the solar panel industry, washing machine imports doubled in November. Analysts speaking to the WSJ said an additional six months' worth of washing machine imports could enter the US before any tariffs go into effect.