WASHINGTON — The Biden administration on Monday announced a two-year pause on imposing any new tariffs on the solar industry, following an outcry from importers who have complained the levies are threatening broader adoption of solar energy in the United States.
The decision is a victory for domestic solar installers, who said the tariffs would put at risk the Biden administration’s goal of significantly cutting carbon emissions by the end of the decade. But it will go against the wishes of American manufacturers and labor unions, which have been pushing the administration to erect tougher barriers on cheap imports to help revive the domestic solar industry.
To counteract those complaints and boost the domestic solar industry, the administration also announced it would take immediate steps to attempt to speed domestic manufacturing of solar components. Those efforts include a series of presidential orders that President Biden will sign to invoke the authorities of the Defense Production Act, which gives the president expanded powers and funding to direct the activities of private businesses.
But trade experts said Mr. Biden’s actions may still short cut trade laws aimed at protecting American workers, by putting the White House on course to undermine an ongoing administration investigation into potential trade violations by Chinese solar manufacturers.
The Commerce Department had been considering whether to impose the tariffs as part of a trade case. The case accused Chinese solar companies of trying to get around existing levies by moving their operations out of China and into Southeast Asia, which now provides the bulk of solar products used in the United States. In 2020, 89 percent of the solar modules used in the United States were imported, with Vietnam, Malaysia, South Korea and Thailand accounting for the largest shipments.
If the Commerce Department determines that the factories were set up to circumvent U.S. tariffs, the administration could retroactively impose tariffs on the factories’ shipments to the United States. But under the tariff “pause” that Mr. Biden ordered on Monday, such tariffs could not be imposed for the next two years.
The Commerce Department began its investigation after Auxin Solar, a small, California-based manufacturer of solar panels, requested an inquiry into whether Chinese companies were circumventing rules intended to prevent state-supported solar parts from being dumped into the U.S. market by moving factories to Vietnam, Malaysia, Thailand and Cambodia.
On Monday, Auxin’s chief executive, Mamun Rashid, said President Biden was interfering with the inquiry.
“By taking this unprecedented — and potentially illegal — action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law,” Mr. Rashid said in a statement.
Commerce Department officials said their investigation would continue and that any tariffs that resulted from their findings would begin after the 24-month pause expired. “The president’s emergency declaration ensures America’s families have access to reliable and clean electricity while also ensuring we have the ability to hold our trading partners accountable to their commitments,” Gina Raimondo, the Commerce secretary, said in a release.
A Biden administration official said the administration was invoking Section 318(a) of the Tariff Act of 1930, which allows the president to suspend certain import duties to address an emergency.
But Scott Lincicome, a trade policy expert at the Cato Institute, a libertarian think tank, said that the administration’s actions seemed to be “quite the stretch of the statute.” The text of the statute allows the president to “declare an emergency to exist by reason of a state of war, or otherwise,” and during such a state of emergency to import “food, clothing, and medical, surgical, and other supplies for use in emergency relief work” duty free, Mr. Lincicome pointed out.
American solar companies have said that the prospect of more — and retroactive — tariffs was already having a chilling effect on imports. Groups such as the Solar Energy Industries Association have been lobbying the White House against the tariffs and on Monday welcomed news that the administration would pause any new levies.
“Today’s actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home,” Abigail Ross Hopper, the president and chief executive of the Solar Energy Industries Association, said in an emailed statement.
“During the two-year tariff suspension window,” she said, “the U.S. solar industry can return to rapid deployment while the Defense Production Act helps grow American solar manufacturing.”
The possibility of tariffs had touched off an ugly battle in recent months over the course of the U.S. solar industry.
Companies that rely on imported products, and officials who have been seeking to speed the transition to solar energy, said that the Commerce Department inquiry had stalled installations across the country, slowing the transition away from fossil fuels.
NextEra Energy, one of the largest renewable energy companies in the country, said it had expected to delay the installation of between two and three gigawatts worth of solar and storage construction — enough to power more than a million homes — because of the investigation.
“The last couple of months we have had to pause all construction efforts,” said Scott Buckley, president of Green Lantern Solar, a solar installer based in Vermont. Mr. Buckley said his company had been forced to put about 10 projects on hold, which would have resulted in the installation of about 50 square acres of solar panels.
Mr. Buckley said there was no easy solution to the country’s reliance on imported products in the short term, and that the White House’s actions on Monday would allow companies like his to resume installations this year.
“This is a get back to work order,” he said. “That’s the way I think about it. Let’s clear the log jams.”
But domestic solar producers and U.S. labor unions said these imports clearly violated U.S. trade law, which forbids companies from trying to avoid U.S. tariffs by moving production or assembly of a product to another country. They accused importers of exaggerating their industry’s hardships to try to sway the Biden administration and preserve profit margins that stem from unfairly priced imports.
“If you have a supply chain that depends on dumped and subsidized imports, then you’ve got a problem with your supply chain,” said Scott Paul, the president of the Alliance for American Manufacturing. White House officials said Monday that Mr. Biden would sign a suite of directives meant to increase the domestic development of low-emission energy technologies. He is set to make it easier for domestic suppliers to sell solar systems to the federal government. And he will order the Department of Energy to use the Defense Production Act to “rapidly expand American manufacturing” of solar panel parts, building insulation, heat pumps, power grid infrastructure and fuel cells, the administration said in a fact sheet.
The Defense Production Act has become a favorite tool of Mr. Biden in his efforts to revitalize domestic manufacturing, including the production of critical minerals and baby formula.
