Customs Playing Hardball With Solar Importers

photo by Suntech

The Solar Energy Industries Association, a representation of the U.S. and foreign solar industry, is crying foul over a decision by U.S. Customs officials to impose a tariff of 2.5 % on solar panel imports.  Customs has decided that most solar panel imports now qualify as generators due to the presence of bypass diodes in the panels themselves.  Worse yet, the decision is retroactive and companies that are delinquent may have to pay double the tariff. The total cost to the industry may be $70 million this year alone. 

Whether or not this is the true reason for the tariff is up for debate.  What is clear is that this move sends a strong signal to countries that are looking to dominate the fledgling U.S. solar industry, such as China and may result in retribution in the form of higher tariffs on U.S. energy exports. 

The timing of this decision is unwelcome to global solar manufacturers who have an abundance of oversupply on their hands due to the global economic crisis.  So far this year prices in the solar panel market have dropped almost 20%. 

This change in policy may counteract to some degree the protectionist policies of the Chinese government which provides Chinese solar manufacturers an unlevel playing field.  The Chinese government offers massive subsidies to it's domestic solar manufacturers even providing 100% financing in addition to low corporate tax rates. 

While I commend the U.S. Customs Department for this tougher stand on foreign solar panel imports, it doesn't go far enough to providing legitimate competition between U.S. solar companies and Chinese manufacturers.  It is unfortunate that many legitimate global manufacturers will feel the sting of this increase.  For that reason I believe we need to take a more focused approach to trade policy in this industry and provide a much higher tariff to countries such as China that not only engage in protectionist policies but also artificially set currency rates.  Don't hamper the ability of U.S. manufacturers to be a player in the global solar market while punishing those countries that don't want to engage in open competition.