Newly approved congressional resolutions to end a temporary moratorium against new U.S. tariffs on solar panel imports from some Asian countries is generating a fresh wave of uncertainty in the solar industry.
The U.S. House voted last Friday to pass a Congressional Review Act resolution that would roll back a two-year emergency reprieve that President Joe Biden announced last summer to block the U.S Commerce Department from imposing countervailing duties on imports from Malaysia, Thailand, Vietnam and Cambodia. And, on Wednesday, the U.S. Senate followed suit in a 56-41 bipartisan vote to not only lift the moratorium, but allow the Commerce Department to also impose retroactive tariffs on imports dating back to fall 2021 that could total up to $1 billion.
Biden has promised to veto the resolution, which the Solar Energy Industries Association, or SEIA, says could eliminate some 30,000 jobs as developers cancel solar projects across the nation, potentially affecting up to 14% of all projected solar development nationwide this year.
But even with the promised veto, industry representatives say congressional support for the resolution sends a damaging message that undermines needed business certainty for the industry to maintain and accelerate the nation’s current pace of development.
“Any legislation that threatens 30,000 American jobs and weakens our nation’s energy security to this degree should be dead on arrival,” SEIA President and CEO Abigail Ross Hopper said in a statement following the Senate vote. “Unfortunately, politics won the day, and our legislators voted to pull the rug out from businesses that are investing billions of dollars and employing thousands of people in their states.”
Bipartisan support for the resolution, however, reflects significant divisions among congressional Democrats, with Democratic senators from the Rust Belt states of Ohio, Pennsylvania and Michigan voting to protect domestic manufacturers against unfair competition from Asian importers.
The issue first arose in April 2022, when the Commerce Department began investigating manufacturing operations by companies in the four Asian countries to determine if they were circumventing import tariffs by incorporating Chinese equipment and components in their products that would otherwise face U.S. trade restrictions imposed on China. Such violations could culminate in new tariffs of up to 250% on imports from those countries, which the Commerce Department originally warned could be made retroactive to November 2021.
That threw the industry into crisis last year, with hundreds of solar projects canceled nationwide almost overnight because investors could no longer calculate development costs going forward. Tens of thousands of workers faced layoffs, including scores of employees at Albuquerque-based Affordable Solar – New Mexico’s largest solar construction and installation firm – which temporarily lost all its utility-scale development projects.
The crisis subsided when Biden announced the emergency reprieve – including a prohibition on retroactive tariff application if the Commerce Department does impose countervailing duties when the moratorium ends next year. The executive order aims to give U.S. industry time to build domestic manufacturing capacity to steadily decrease dependence on Asian imports, which last year accounted for about 80% of the solar modules used in U.S. installations.
Domestic manufacturing is now rising, thanks to the tariff reprieve, and to major incentives in the Inflation Reduction Act, or IRA, that Congress approved last summer, which includes a 30% manufacturing tax credit for investments in solar facilities and equipment, and for mass production of solar components. In fact, since the IRA took effect, industry investors have announced plans to build 26 new U.S.-based solar manufacturing facilities, plus 10 new utility-scale battery-storage factories, according to the SEIA.
But industry needs time to scale up, said Peter Lorenz, CEO of Albuquerque-based Unirac Inc., which builds mounting structures for solar systems.
“The IRA is providing compelling incentives to build manufacturing in the U.S., and we’re seeing lots of announcements for new factories and facility expansion across the country,” Lorenz told the Journal. “But it takes time – it can’t happen overnight – and that’s why Biden’s emergency moratorium is so important. Eliminating that would send shockwaves throughout the industry.”
The ongoing tariff dispute creates chronic uncertainty, said Bob Bellemare, CEO of GridWorks, Affordable Solar’s utility-scale development division.
As reported in the Journal on Monday, Affordable Solar and other comapnies in the solar industry are experiencing rapid growth for now, due in large part to the IRA.
But, “tariff uncertainty is a real challenge for the industry,” Bellemare told the Journal. “It greatly affects project economics. Even if the congressional resolution is vetoed, it makes it hard to plan economics going forward because of continuing uncertainty about what industry can rely on.”
Regardless, new tariffs will likely be imposed next year after Biden’s moratorium ends, because the Commerce Department issued a preliminary determination in December that at least four companies in the Asian countries under investigation are skirting tariffs.
That determination prompted bipartisan support for the resolution to roll back Biden’s reprieve, especially with anti-Chinese sentiment growing in Congress.
But New Mexico Democratic Sen. Martin Heinrich – who led congressional efforts last year against tariffs – implored Biden to stand firm.
“Imposing these retroactive penalties will kill thousands of American jobs, hurt our clean energy transition, and undermine our progress in taking on the climate crisis,” Heinrich said in a statement. “President Biden has promised to veto this resolution – for blue collar Americans and our climate. The future that our children will inherit depends on his veto.”
_WebHeadline”>Congress votes to end moratorium against tariffs on some solar panel imports. What does that mean for New Mexico companies?