Biden Blocked Solar Panel Tariffs To 'Accelerate Domestic Production.' Two Years Later, China Is Even More Dominant.

'It will take months, if not years, to fix this horrible policy failure,' American solar company CEO says

(Reuters/Brian Snyder/File Photo)
June 13, 2024

In June 2022, President Joe Biden implemented an unprecedented 24-month moratorium on tariffs targeting Chinese solar panels and invoked a Cold War-era law in an effort to spur domestic clean energy manufacturing. The president characterized the action as a two-year "bridge" that would allow American companies to catch up to their Chinese competitors.

Two years later, the policy has expired and the federal government has infused billions of dollars of taxpayer funding into solar projects nationwide, but the United States has an even tinier solar panel market share relative to China and only a small fraction of domestic electricity is generated by solar, according to market data reviewed by the Washington Free Beacon.

"Never again should another American president intentionally subvert U.S. law and give China—the greatest geopolitical and military threat to our nation—a free pass to continue illegal trade activity that is directly harming American manufacturers and workers," Nick Iacovella, senior vice president at the U.S. manufacturing trade group Coalition for a Prosperous America, told the Free Beacon.

"The tariff moratorium not only gave China unfettered access to the U.S. market, but it also directly aided China’s overcapacity and dumping in the U.S. solar market," Iacovella said.

China's continued dominance of the global solar panel supply chain underscores the tension between the White House's effort to quickly deploy green energy infrastructure as part of its sweeping climate agenda, and its effort to simultaneously onshore production of that technology as part of its "Investing in America" agenda.

According to the latest market data analyzed by research firm Wood Mackenzie, prior to Biden's actions to boost domestic production in early June 2022, the United States had an annual solar panel manufacturing capacity of roughly 6 gigawatts while China had an annual capacity of 198 gigawatts. Since then, domestic capacity has grown to about 27 gigawatts per year, but Chinese capacity has surged past 1,000 gigawatts, or 1 terawatt, per year.

The U.S. solar panel manufacturing market share relative to China has declined from more than 3 percent to around 2.7 percent during Biden's 24-month bridge, the data shows. And for every gigawatt of solar manufacturing capacity added in the United States, China added roughly 40 gigawatts.

At the same time, following Biden's moratorium on solar panel tariffs, U.S. imports of the technology from Asia skyrocketed, according to U.S. Census Bureau data compiled by the S&P Global Market Intelligence Global Trade Analytics Suite. In 2023, imports of panels increased a staggering 82 percent year over year, a nearly tenfold increase compared to the past five years.

And federal data show that solar energy generated just 3.9 percent of the total utility-scale electricity generated in the United States last year. That figure represented a minuscule 0.5 percent increase compared to 2022.

"The tariff moratorium has been an epic failure. Rather than provide a bridge to develop U.S. manufacturing built with support from the Inflation Reduction Act, the moratorium caused a wave of cheap unlawfully circumventing Chinese modules that crashed U.S. module pricing and stifled domestic production development and expansion," Mamun Rashid, CEO of Auxin Solar, told the Free Beacon. Auxin is one of the few American solar panel manufacturers.

"The moratorium was a gift to Chinese solar companies at the expense of American producers and their workers. Notably, it was such bad policy that it forced the filing of a new trade case just a few weeks ago. It will take months, if not years, to fix this horrible policy failure that undermined our U.S. manufacturing base and national security," Rashid added.

Overall, the data appear to vindicate trade groups like the Coalition for a Prosperous America, domestic solar manufacturers, and both Republican and Democratic lawmakers who loudly opposed Biden's policy. Critics warned at the time that the policy would lead to a flood of Chinese products entering the U.S. market and harm American manufacturers' ability to compete.

The White House announced on June 6, 2022, that Biden had ordered the Department of Commerce to stop enforcing Obama-era anti-dumping and countervailing tariffs imposed on Chinese solar panels routed through Southeast Asia. The president also authorized the use of the Defense Production Act of 1950 to "accelerate domestic production" of solar panels.

Biden took the drastic actions amid a federal probe into whether Chinese companies were illegally routing products through Cambodia, Malaysia, Thailand, and Vietnam to avoid American duties on the goods. That probe slowed imports and triggered a supply crunch for solar installers that green energy industry groups like the Solar Energy Industries Association (SEIA) warned would threaten Biden's climate and decarbonization goals.

Months later, in April 2023, the House passed a bipartisan resolution to reverse the tariff moratorium and, in early May 2023, the Senate followed suit with nine Democrats voting alongside most Republicans.

The president then vetoed the bill after the White House issued a memo stating the bill would "create deep uncertainty for jobs and investments in the solar supply chain."

"Senator Brown has been clear: the administration never should have paused these tariffs," a spokesman for Sen. Sherrod Brown (D., Ohio), who voted for the resolution last year, told the Free Beacon in a statement. "He led the effort to fight back against this misguided, damaging pause, and to push the administration to do more to stand up to China’s rampant trade cheating."

"He continues to stand alongside America’s solar industry—including First Solar in Perrysburg, Ohio—by working to repair the damage caused by the Administration's failure to stop a flood of illegal Chinese imports," the spokesman continued.

Still, proponents of the tariff moratorium argue it did accomplish the goal of ensuring a steady supply of solar panels for U.S. developers expanding green energy capacity. In a release noting the expiration of the moratorium this month, the White House said solar manufacturing and deployment have both grown "dramatically" since the policy was implemented.

The United States has a total installed solar energy capacity of 200 gigawatts, according to the quarterly U.S. Solar Market Insight report published by SEIA and Wood Mackenzie earlier this month. And the Biden administration has earmarked billions of dollars in tax credits and direct grants for solar panel production and installation made possible by the behemoth Inflation Reduction Act passed in 2022.

"The temporary tariff moratorium did its job to ensure a sufficient supply of solar modules to support the need for increased clean energy deployment," Stacy Ettinger, SEIA's senior vice president of supply chain and trade, told the Free Beacon in a statement.

"SEIA is not advocating for an extension of the moratorium, and we are focused on solutions to continue the build-out of a robust solar and storage manufacturing sector here in the United States."

SEIA largely represents solar installers and energy developers, but its membership notably includes subsidiaries of some of the largest Chinese solar panel manufacturers. For example, China-based companies Trina Solar, JA Solar, LONGi Solar, and Canadian Solar are all listed in the group's membership directory. Trina Solar executive Kevin Andrews currently sits on SEIA's board of directors.

The White House did not respond to requests for comment.