The Biden administration believes that purchasing solar panels from China in the short term is necessary to achieve climate goals. The United States continues to delay imposing tariffs on imported Southeast Asian solar panels.
On Tuesday, US Eastern Time, President Biden vetoed a congressional resolution attempting to restore tariffs on solar panels from four Southeast Asian countries. This means that the US tariff exemption for solar panels from Malaysia, Thailand, Vietnam, and Cambodia will continue until June 2024. Biden also stated that he does not intend to extend the exemption after this date.
The US Senate passed a resolution to restore tariffs by a narrow margin earlier this month, with several important Democrats supporting this measure. Analysis suggests that after being rejected by Biden, the resolution was basically "stillborn". To overturn the President's veto order, two-thirds of the members of both houses of Congress need to agree, and this number of votes on this issue is basically difficult to achieve.
The US tariff policy around the four Southeast Asian countries is actually aimed at China. During the Trump administration, the United States imposed tariffs on China's solar energy industry, and Biden extended this policy for four years in February last year. However, after an investigation last year, the United States Department of Commerce believed that some Chinese solar panel manufacturers tried to avoid US tariffs by producing finished products in Southeast Asia. Some lawmakers and small solar companies in the United States have called for additional tariffs on products from the four Southeast Asian countries to "punish China". However, due to various reasons, Biden did not follow this voice and granted tariff exemptions for solar panels from the four countries mentioned above in June last year, with a validity period of two years.
Last December, a US trade court ruled that four Chinese companies were "attempting to evade US tariffs on Chinese solar products" by shipping products through factories in Southeast Asia. Afterwards, some members of Congress targeted Biden's earlier suspension of tariffs on the four Southeast Asian countries, hoping to overturn it.
Between "punishing China" and ensuring that his presidential agenda is prioritized, Biden chose the latter, which is one of his original intentions in vetoing the resolution. Promoting the transformation of clean energy is one of the goals that has been running through Biden's presidency. His goal is to rid the US power sector of its dependence on fossil fuels by 2035, which will make solar energy account for 40% of the US electricity demand, far higher than the current 3%. Given this goal, the United States needs to install a large amount of solar equipment, and currently relies on nearly 80% of imports from Southeast Asian countries.
This move is also intended to reserve time for the growth and growth of the US manufacturing industry, as US factories are currently not ready to take over all the returning manufacturing industries. Biden stated in his veto statement on Tuesday that restoring tariffs is not conducive to innovation in the United States and will also bring serious uncertainty to solar companies and workers. He hopes to increase his domestic solar panel manufacturing capacity by eight times by the end of his first term, but this production capacity cannot be achieved overnight. US factories need time to grow, and purchasing solar panels from China in the short term is necessary to meet climate goals.
The policy of imposing tariffs not only threatens Biden's presidential agenda, but also harms the US solar industry. The Solar Energy Industry Association of America (SEIA) stated in a statement that legislation to restore tariffs will reduce 30000 jobs in the US solar industry and weaken US energy security. The threat of retroactive tariffs and higher fees of up to $1 billion alone led to the delay or cancellation of hundreds of solar projects in the United States last year.
The US industry appreciates Biden's veto order, stating that importing solar panels is crucial. At present, solar panels manufactured domestically in the United States account for less than 30% of the country's total usage, which is still the number after last year's Inflation Reduction Act provided tax incentives and domestic manufacturing continued to increase.
On May 12th, the US government also released new details on the preferential policies of the Inflation Reduction Act, which is considered to open a window for US solar energy producers to continue importing solar cells. According to the new regulations, American solar developers must develop, produce, or manufacture a certain proportion of finished products in the United States in order to obtain full tax credits, but there is no clear restriction on the proportion of battery origin. Analysts believe that this means that solar cells used to assemble photovoltaic modules can be produced overseas as long as the other components of the product meet the cost threshold of domestic content in the United States.