Feb 4, 2022 - Politics & Policy

Scoop: Biden to extend, but modify, Trump's solar tariffs

Biden waving his finger in front of a banner
President Biden during a November visit to General Motors' Factory ZERO all-electric vehicle assembly plant in Detroit. Photo: Emily Elconin/Bloomberg via Getty Images

President Biden plans to maintain former President Trump's tariffs on solar cells and panels, but loosen some restrictions on importing supplies from Asia to help combat climate change, according to people familiar with the matter.

Driving the news: Biden will issue a proclamation on Friday morning to extend the so-called Section 201 tariffs, due to expire Sunday, for another four years, an administration official said.

Why it matters: Biden's decision is an attempt to balance two competing priorities — both crucial to his presidency:

  • Long-term, he wants to bolster domestic manufacturing and stimulate U.S.-based supply chains. But, in the short-term, he needs to rely on imports for crucial materials and certain equipment to fight climate change.
  • Labor unions had been pressing the administration to fully extend the Trump tariffs, but were bracing for disappointment after Reuters reported last week that Biden was considering loosening some of them.

Zoom in: Biden will formally exclude bifacial solar panels, which are used in big-utility projects, to help importers and domestic installers increase solar capacity as part of his overall climate and clean energy goals.

  • The new rules will also increase the amount of solar cells that can be imported duty-free, from 2.5 gigawatts to 5 gigawatts.
  • Officials did not want to punish domestic solar panel manufacturers who rely on foreign cells.

Between the lines: An administration official noted that the 5 gigawatt quota is unlikely to directly benefit China's government, because solar cells are mostly imported from places like Vietnam and Malaysia.

  • Union officials counter that many solar cell manufacturers in Southeast Asia have some form of Chinese government ownership.
  • Biden will maintain solar panel tariffs that directly target China's government.

The big picture: The Biden administration has kept many of Trump's tariffs on China in place, with levies on some $350 billion in goods.

  • Biden officials have also suggested that, despite Trump’s rhetoric, his trade approach didn’t go far enough in preventing China from subsidizing crucial industries.
  • "China's government continues to pour billions of dollars into targeted industries and continues to shape its economy to the will of the state," said Katherine Tai, the U.S. trade representative, in October.
  • The Biden administration has considered launching a separate investigation on the Chinese government's use of industrial subsidies, using Section 301 of the 1974 Trade Act.
  • Tensions over the timing of a possible 301 investigation — and media reports that it was imminent — led Tai to accuse national security adviser Jake Sullivan of trying to undermine her, Axios reported last month.

Background: President Trump imposed 30% tariffs on solar panels in 2018, most of which were manufactured in China, as part of his “American First” trade agenda.

  • Last summer, domestic solar panel manufacturers petitioned the Biden administration to extend the Trump tariffs, which decreased to 18%.
  • While the U.S. solar manufacturing industry has nearly tripled, imports of solar equipment made up 85% of U.S. sales, according to the Wall Street Journal.

The bottom line: Most of the employment in the solar industry involves installation and development, with 150,000 jobs in that sector, according to the National Solar Job Census in 2020.

  • There were 31,000 jobs in solar manufacturing.

Editor's note: This story has been updated to correct the description of 31,000 manufacturing jobs. The number refers to solar manufacturing overall, not only solar panel manufacturing.

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