US Slaps 50% tariffs On Chinese Solar Cells

By Prasanna Singh/ Updated On Wed, May 15th, 2024

Highlights :

The global overcapacity in solar manufacturing, weighed down by massive Chinese capacities shows no signs of fixing itself without punitive tariffs.

US Slaps 50% tariffs On Chinese Solar Cells

In its continuing efforts to build, and protect existing US solar manufacturers from Chinese imports, US President Joe Biden has announced a series of tariffs directed towards Chinese goods, including solar cells.

Under Section 301 of the Trade Act of 1974, solar cells – whether assembled or not into modules – tariffs will increase from 25% to 50% this year. The move has been explained as a riposte to Chinese efforts to dump produce in the US due to overcapacity in China, and depressing prices below viable limits.

However, it remains to be seen how far these tariffs work, simply because the world does not have enough cell making or wafer making capacity vis a vis module making , which is still spread out better. Even in the US, firms have announced significant plans for module manufacturing, even as cell making an wafer factories have lagged behind. Not to mention polysilicon plants.

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On the same day, another tariff increase directed towards China made batteries both for lithium-ion electric vehicle (EV) batteries and non-EV batteries will lead to an increase from 7.5% to 25%, although the timeframe will be different. For EV batteries this will occur in 2024, while for non-EV batteries it will happen in 2026. Finally, a tariff rate on battery parts will increase from 7.5% to 25% in 2024. In this case again, the time provided has been done to allow domestic capacities to ramp up.

Coming as these measures do after reports that the Biden Administration will also lift the exemption provided to Chinese Bifacial module imports from tariffs, this is a trade battle that is nowhere close to an end yet.

The failure to add downstream manufacturing capacity at the same level as Module making is a challenge not limited to the US, but in India as well. And the little extra cell making capacity India has started adding in the past few months and the year ahead will be severely tempted by the prospect of a more lucrative US market for exports, as seen in the case of modules as well till last year.