Are Chinese Manufacturers Rerouting Solar Panels to Avoid U.S. Tariffs?

The Leslie Marshall Show

Leslie is joined by Scott Paul, President of the Alliance for American Manufacturing (AAM), a partnership established by some of America’s leading manufacturers and the United Steelworkers union.

For roughly 15 years, Mr. Paul and AAM have worked to make American manufacturing a top-of-mind issue for voters and our national leaders through effective advocacy, innovative research, and a savvy public relations strategy.

Leslie and Scott discuss the Department of Commerce's investigation into whether Chinese manufacturers are re-routing solar panels through four Asian countries in an attempt to avoid U.S. tariffs.

Here is more background on the subject from Scott's colleagues at AAM, Elizabeth Brotherton-Bunch and Matthew McMullan:

The investigation came about after California solar panel maker Auxin Solar filed a petition with the Commerce Department asking for the investigation, arguing imports from Malaysia, Vietnam, Cambodia, and Thailand were actually made in China.

Auxin also had support from Members of Congress on both sides of the aisle and in the Senate and House, with Ohio Sens. Rob Portman (R) and Sherrod Brown (D) writing to Commerce Secretary Gina Raimondo:

“As we understand it, these operations use raw materials, labor, capital investment, and research and development from China. Moving to a third country to assemble a product with inputs from the country subject to the original AD/CVD order is textbook circumvention. (AD/CVD stands for Antidumping and countervailing duties, which are intended to offset the value of dumping and/or subsidization, thereby leveling the playing field for domestic industries injured by such unfairly traded imports). As you know, if legitimate circumvention allegations go unaddressed, entire domestic industries and thousands of American manufacturing jobs are at risk.”

It all seemed pretty straightforward; Commerce would investigate the claims and issue a decision. If you follow this blog, you know that these sorts of trade cases happen all the time.

But ever since Commerce moved forward with the probe, solar importers have done a full court press to convince everyone that the investigation would spell doom for the industry. There have been many, many many stories in recent weeks arguing that the solar industry is now “frozen” because of the investigation and that it will hinder the Biden administration’s climate goals. They’ve also argued that shipments have already slowed because of the investigation.

It all strikes us as somewhat odd, given that no decision has been made (and thus no new tariffs have been issued). What do these folks have to fear?

That’s the argument that Auxin CEO Mamun Rashid made in a recent interview with E&E News.

“If there’s been no cheating going on, there’s absolutely nothing to worry about,” he said. “If I’m a manufacturer overseas, or I’m an importer, and I know I wasn’t participating in any kind of circumvention, I wasn’t cheating, I don’t have anything to worry about. I don’t understand why the concern is there.”

Rashid also rejected the argument that tariffs, if they are eventually placed on these products, will harm the industry and limit progress on reducing climate emissions. He said:

“I can only speak to my experience. In the last 14 years, we have seen tariffs being instituted and we’ve seen the predictions that were made on what would happen if the tariffs were put in place. And it has never materialized. Deployments have continued to grow double digits and outperform predictions, even prior to tariffs being imposed, and pricing has continued to fall. I have no reason to believe it’ll be any different this time.”

So why is SEIA mounting such an aggressive campaign against this investigation? Well, solar is an obviously important source of green energy and therefore plays a huge role in our national climate goals, but it’s also an industry, and a business. And as a trade association representing lots of importers it’s performing its primary function: Protecting their profits.

It could also be because some of its member companies are the same ones that were originally targeted by the tariffs that these imports are accused circumventing, as the Prospect points out, and that some indeed source from suppliers that use slave labor in China’s Xinjiang province — where the government has forced an estimated 1 million Uyghur and other typically Muslim ethnic groups into detention camps, according to researchers and news organizations. And this big push could also be because it could be gearing up to take a run at overturning a ban on imports made by that labor that’s set to take effect in about six weeks.

WEBSITEs: 1. AmericanManufacturing.org 2. A website with an AAM petition asking Congress to support America's solar manufacturers and workers: TinyURL.com/SupportAmericanSolar

TWITTER: 1. AAM - @KeepItMadeInUSA 2. Scott Paul - @ScottPaulAAM

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