Solar Panel Trade Dispute
On Tuesday, it was announced that the Commerce Department would levy new tariffs on solar panel imports from Chinese solar panel companies. The United States initially levied tariffs in 2012 on the import of solar panels with Chinese solar cells, but most of the companies this was directed towards were able to circumvent the tariff by producing their solar cells in places like Taiwan with Chinese parts.
The tariffs were raised against Chinese suppliers who were found to be subsidized by the government and selling products in the U.S. for less than what it cost to make. These were in response to complaints that domestic manufacturers could not compete with the government assistance Chinese suppliers were receiving.
The tariff ranges from 35.21% on panels made by Suntech Power to 18.56% on panels made by Trina Solar. A flat 26.89% tariff applies to all other Chinese manufacturers. The market reacted with First Solar, Inc. (NASDAQ: FSLR) and SunPower Corporation (NASDAQ: SPWR) up 3.91% and 5.81% respectively since their Tuesday close. Conversely JinkoSolar Holding Co.,(NYSE: JKS), Canadian Solar Inc.,(NASDAQ: CSIQ), Yingli Green Energy Holding Co. LTD.,(NYSE: YGE) and Trina Solar Limited (NYSE: TSL) were down: 7.48%, 6.74%, 4.07%, and 8.25% from their Tuesday close.
How Will China React
About a year after the U.S. levied tariffs in 2012, the Chinese Ministry of Commerce responded with tariffs on Polysilicon imported from U.S. and Korean suppliers. China’s Ministry of Commerce has announced that the preliminary decision Tuesday “is an abuse of trade remedies. . . and will inevitably lead to the escalation of trade disputes between China and the U.S..”
It will be interesting to see how China reacts as the U.S. waits to make the final decision. It could also be sooner than we think as the U.S. is intending to collect on the tariffs starting now.