Amid opposition from all sides, the Office of the United States Trade Representative (USTR) issued its final decision on September 13 to impose additional 301 tariffs on China, unilaterally and significantly raising tariffs on Chinese products.
The Office of the United States Trade Representative said in a statement that starting September 27, tariffs on Chinese-made electric vehicles will be raised to 100%, tariffs on solar cells will be raised to 50%, and tariffs on electric vehicle batteries, key minerals, steel, aluminum, masks and shore container cranes will be raised to 25%. Tariff increases on other products, including semiconductor chips, will also take effect within the next two years.
The photovoltaic industry is no stranger to the 301 tariffs. The United States has been suppressing China’s photovoltaic industry for more than 10 years. Affected by the two “double-reverse”, “201” and “301” cases and the superposition of tariffs, except for a small number of companies with low “double-reverse” review rates exporting bifacial modules, it is currently basically impossible for mainland my country to directly export photovoltaic cell products to the United States.
On September 14, the China Photovoltaic Industry Association issued a statement accusing the United States of illegally providing large amounts of photovoltaic subsidies and distorting the global photovoltaic market. The article stated that the United States is currently building a high protectionist wall, taking multiple trade restrictions, and setting up photovoltaic tariff barriers layer by layer; on the other hand, it has passed bills such as the Inflation Reduction Act and the Infrastructure Investment and Jobs Act to implement exclusive and discriminatory industrial policies, providing large-scale subsidies to its domestic photovoltaic industry that are suspected of violating multilateral rules, seriously distorting the market-oriented operation of the global photovoltaic industry chain and supply chain, and undermining international cooperation in areas such as global joint response to climate change.
The article lists a series of facts, including the U.S. Inflation Reduction Act, which provides huge subsidies for photovoltaic manufacturing and installation, the U.S. provides a large amount of grant subsidies for photovoltaic technology research and development, and the U.S. has many types and numbers of local subsidy measures for the photovoltaic industry.
Among them, the Inflation Reduction Act introduced by the United States in 2022 provides up to $369 billion in subsidies to support investment and production in the clean energy industry, including local photovoltaic products, in an attempt to reconstruct the photovoltaic industry chain and supply chain. Thanks to the huge subsidies from the US government to the photovoltaic manufacturing industry, local companies can even continue to expand their domestic manufacturing business in the United States while losing revenue.
Take First Solar, for example. According to its 2023 financial report, the company achieved a net profit of $831 million for the whole year, of which about $659.7 million came from subsidies (Government grants receivable), accounting for 79.39%, while there was no such income in 2021 and 2022. In the first quarter of 2024, the company’s financial report achieved a net profit of $236.7 million, of which $282 million came from government subsidies. That is, after deducting government subsidies, First Solar suffered a net loss of $45.27 million in the first quarter of 2024. This huge change from loss to profit is entirely due to the huge subsidies and tax credits supported by the US government for the photovoltaic industry. At the same time, the company announced plans to expand its photovoltaic module factory in Ohio and build a new photovoltaic module factory in Alabama and Louisiana, with a total investment of $2.4 billion, and plans to expand the existing production capacity by more than four times.
The article stated that recently, the United States has frequently accused China’s new energy industry of having large subsidies. At the same time, it has been expanding its own production capacity by implementing exclusive and discriminatory subsidy policies. This is a typical “double standard” behavior and will lead to “overcapacity” in the U.S. photovoltaic industry, impacting the healthy development of the global photovoltaic industry.
After the implementation of the Inflation Reduction Act, the planned construction of photovoltaic capacity in the United States has increased significantly. According to statistics from the Solar Energy Industries Association (SEIA), as of October 2023, there are 25 module production lines and 2 polysilicon suppliers, 9 inverter suppliers, 2 photovoltaic glass suppliers, and 1 backplane supplier in the United States; there are 13GW of module production capacity in operation and 40,000 tons of polysilicon; there are 19.4GW of module production capacity and 3.3GW of battery, silicon wafer, and ingot production capacity under construction; there are 45GW of battery production capacity, 80GW of module production capacity, 14GW of ingot production capacity, and 27GW of silicon wafer production capacity that have announced plans to set up factories. According to statistics from the American consulting firm Wood Mackenzie, based on the currently announced plans, the US photovoltaic module production capacity will exceed 120GW in 2026, which is three times the domestic photovoltaic installation demand by then.
“The U.S. photovoltaic subsidy policy, represented by the Inflation Reduction Act, disregards multilateral economic and trade rules and uses domestic U.S. goods rather than imported goods as a condition for obtaining subsidies. It is a blatant discriminatory policy that violates the obligation of ‘national treatment’.” The China Photovoltaic Industry Association emphasized that China had brought the relevant subsidy policies in the U.S. Inflation Reduction Act to the World Trade Organization on March 26, 2024. After consultations with the United States failed, China applied to the WTO on July 15 to establish an expert group to hear the case. “No matter how it is packaged and beautified, it cannot change the discriminatory, illegal and protectionist nature of the U.S. photovoltaic subsidy policy.”
On September 14, the Ministry of Commerce and the China Council for the Promotion of International Trade responded to the US’s final measure to increase some 301 tariffs on China.
The Ministry of Commerce stated that China has repeatedly lodged solemn representations with the United States on the issue of Section 301 tariffs. The WTO has long ruled that Section 301 tariffs violate WTO rules. Instead of correcting the situation, the United States has further increased tariffs on China, which is a mistake on top of a mistake. The US Section 301 tariff measures are typical unilateralism and protectionism. They not only seriously undermine the international trade order and the security and stability of the global industrial chain and supply chain, but also fail to solve its own trade deficit and industrial competitiveness problems. They have also pushed up the prices of US imported goods, and the costs are ultimately borne by US companies and consumers. China’s latest “Report on the Implementation of WTO Rules and Obligations by the United States” points out that the United States is a “disruptor of the global industrial chain and supply chain”, and once again expresses serious concern about the US abuse of the “Section 301”.
The China Council for the Promotion of International Trade said that the US side ignored the opposition of the Chinese and American business communities to the imposition of additional tariffs and refused to fulfill the US tariff reduction commitments made in the WTO. This unilateral measure that clearly violates WTO rules will seriously affect the confidence of the long-term stable cooperation of related industries between China and the United States and have an adverse impact on the cooperation of the global industrial chain and supply chain. The Chinese business community expressed its firm opposition to this.
Xinhua Times analyzed that the US government imposed tariffs on China in the name of defending so-called “fair competition” but in fact it was to suppress China’s new energy industry. Its policy logic is exactly the same as accusing China of so-called “overcapacity”. However, resorting to unilateral protectionist measures such as high tariffs will only backfire in protecting the competitiveness of American companies.
As direct exports of photovoltaic products to the United States account for a very small proportion, the photovoltaic industry generally believes that the US’s imposition of 301 tariffs on China will have almost no impact on Chinese photovoltaic companies.
What has attracted more attention is the final result of the US anti-dumping and countervailing duty on the photovoltaic products of four Southeast Asian countries. Since the US photovoltaic tariff exemption for the four Southeast Asian countries ended after June 6, it has become more difficult for Chinese photovoltaic companies to “bypass” exports. According to The Paper, in order to avoid risks, most Chinese photovoltaic factories in Southeast Asia have temporarily reduced production to varying degrees since late May.
“At present, a preliminary tax rate has been given for exports from Southeast Asia to the United States. Vietnam is relatively high, while Malaysia and Thailand are relatively low. The official tax rate will not be given until September or October.” Zhong Baoshen, chairman of Longi Green Energy, judged at the semi-annual performance briefing held in early September that the tax rate to be introduced in the future may not be much different from the tax rate proposed in the previous stage. “In general, the production capacity of the four Southeast Asian countries will be taxed when entering the United States. Because the tax rate is too high, Vietnam’s production capacity basically does not meet the conditions for entering the United States, and Malaysia and Thailand’s component production capacity will no longer have the opportunity to enter the United States, but battery production capacity still has the opportunity to continue to enter the United States.”
(Source: The Paper)
Source: The Paper
Original title: China Photovoltaic Industry Association: The United States illegally provides a large number of photovoltaic subsidies, distorting the global photovoltaic market
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What are the implications of the US imposing additional tariffs on China’s solar industry?
Table of Contents
US Imposes Additional Tariffs on China, Escalating Trade Tensions and Threatening Global Solar Industry
In a move that has sparked widespread opposition, the Office of the United States Trade Representative (USTR) has announced its final decision to impose additional tariffs on China, significantly raising tariffs on Chinese-made products. The move, which takes effect on September 27, targets various industries, including electric vehicles, solar cells, electric vehicle batteries, key minerals, steel, aluminum, masks, and shore container cranes.
The solar industry, in particular, has been hit hard by the tariffs, with the USTR increasing tariffs on solar cells to 50%. This is not the first time the US has targeted China’s solar industry, with the country having been subject to various trade restrictions and tariffs for over a decade. The “double-reverse” cases, “201” and “301” cases, and the imposition of tariffs have made it nearly impossible for Chinese companies to export photovoltaic cell products to the US directly.
In response to the latest tariff hike, the China Photovoltaic Industry Association has accused the US of illegally providing large-scale subsidies to its domestic solar industry, distorting the global market and undermining international cooperation on climate change. The association points to the US Inflation Reduction Act, which provides up to $369 billion in subsidies to support investment and production in the clean energy industry, including local photovoltaic products.
The Inflation Reduction Act has been instrumental in supporting US-based solar companies, such as First Solar, which has received significant government subsidies. According to its 2023 financial report, First Solar achieved a net profit of $831 million, of which about $659.7 million came from government subsidies. The company’s financial report for the first quarter of 2024 revealed a net profit of $236.7 million, with $282 million coming from government subsidies. This has enabled the company to expand its production capacity, with plans to invest $2.4 billion in new factories in Ohio, Alabama, and Louisiana.
The China Photovoltaic Industry Association has criticized the US for its “double standard” behavior, accusing the country of implementing exclusive and discriminatory subsidy policies while accusing China’s new energy industry of having large subsidies. The association argues that this will lead to “overcapacity” in the US solar industry, impacting the healthy development of the global solar industry.
The impact of the tariffs and subsidies on the global solar industry cannot be overstated. The increased production capacity in the US, driven by government support, has led to concerns about overcapacity and the distortion of the global market. The tariffs on Chinese-made solar cells and other products will likely lead to increased costs for consumers and could potentially slow down the adoption of solar energy.
As the trade tensions between the US and China continue to escalate, the global solar industry is caught in the crossfire. The imposition of tariffs and subsidies is not only hurting Chinese companies but also threatening the growth and development of the solar industry as a whole. It is essential for governments and industry stakeholders to work together to promote fair trade practices and support the transition to a low-carbon economy.
Keyword Targets:
Solar industry tariffs
China Photovoltaic Industry Association
Office of the United States Trade Representative (USTR)
Inflation Reduction Act
Subsidies for solar industry
Global solar market
Overcapacity in solar industry
Fair trade practices
Low-carbon economy
Optimized Subheadings:
US Imposes Additional Tariffs on China, Escalating Trade Tensions
Solar Industry Hit Hard by Tariffs and Subsidies
China Accuses US of Illegal Subsidies and Market Distortion
US Companies Benefit from Government Support
Global Solar Industry Caught in the Crossfire
Promoting Fair Trade Practices and a Low-Carbon Economy
– What are the implications of the new 301 tariffs imposed by the US on China for global supply chains?
US Imposes Additional 301 Tariffs on China, Escalating Trade Tensions and Impacting Global Supply Chains
The Office of the United States Trade Representative (USTR) has sparked controversy by issuing a final decision to impose additional 301 tariffs on China, effective September 27. This move has raised concerns about the impact on global trade, supply chains, and the photovoltaic industry.
Tariffs on Chinese-Made Electric Vehicles and Solar Cells
According to the USTR statement, tariffs on Chinese-made electric vehicles will increase to 100%, while solar cells will face a 50% tariff. Tariffs on electric vehicle batteries, key minerals, steel, aluminum, masks, and shore container cranes will also rise to 25%. Furthermore, tariff increases on other products, including semiconductor chips, will take effect within the next two years.
China’s Photovoltaic Industry Files Grievances
The China Photovoltaic Industry Association has accused the United States of distorting the global photovoltaic market by providing large-scale subsidies to its domestic industry. The association claims that these subsidies violate multilateral trade rules and unfairly benefit US companies.
US Solar Industry Subsidies
The Inflation Reduction Act, passed in 2022, provides up to $369 billion in subsidies to support investment and production in the clean energy industry, including local photovoltaic products. This move aims to reconstruct the photovoltaic industry chain and supply chain. In contrast, China’s photovoltaic industry has been facing significant restrictions, making it difficult for mainland Chinese companies to export photovoltaic cell products to the US.
Case Study: First Solar’s Financial Report
First Solar, a leading US-based photovoltaic company, reported a net profit of $831 million in 2023, with 79.39% coming from government subsidies. In the first quarter of 2024, the company’s financial report showed a net profit of $236.7 million, with $282 million coming from government subsidies. This substantial change from loss to profit is attributed to the massive subsidies and tax credits supported by the US government for the photovoltaic industry.
Overcapacity and Double Standards
The China
