Today the U.S. International Trade Commission (ITC) has issued its long-awaited recommendation on trade action on imports of solar PV cells and modules, under the Section 201 process. And while the proscribed “remedies” are a bit all over the map, all commissioners are recommending a combination of import restrictions with either tariffs or an import licensing fee.
The most aggressive tariff recommendation appears to have come from Commissioner Schmidtlein, who is calling for ad valorem duties of 10% on the first 500 MW of imported solar cells, and a 30% rate for any above that quota.
Schmitdlein called for the quota to be raised by 100 MW per year, and for duties on the first 500-800 MW to fall 0.5% per year. She additionally recommended a 35% ad valorem tariff on modules.
Commissioner Broadbent called for an import quota on cells and modules set at 8.9 GW for the first year. While pv magazine has noted that such import quotas are particularly dangerous as they could set a hard cap on the solar market, 8.9 GW gives significantly more breathing room than the 5.7 GW that SolarWorld recommended.
In particular, ITC has recommended that Singapore and a number of other nations be exempt from any global trade action. This means that REC Solar could be a source for nearly 1 GW of modules made with tariff-free cells.
Broadbent also took up SEIA’s proposal and has recommended an import license fee at a minimum price of $0.01 per watt. At this price the fee would generate $89 million in government revenue in 2018 if the full 8.9 GW of cells and modules were imported.
Two commissioners, Williamson and Johanson, have issued a joint recommendation. They are calling for a 30% ad valorem tariff on imported solar cells, with the first 1 GW of imports exempt in 2018, to increase 200 MW per year. These two commissioners are also calling for increased 30% duty on modules.
What is not clear at this time is what the basis for the ad valorem rate will be. If applied to current cell and module prices, 10-35% ad valorem tariffs on either cells or modules would result in tariff levels no higher than around $0.13 per watt on modules, which analysts say would have a much less significant impact than the tariff proposals of Suniva and SolarWorld.
However, in their trade remedy proposals SolarWorld and Suniva both called for tariffs to be calculated based on prices from previous years, which would double the level of proposed tariffs, if not bringing them to the level of what these two companies have proposed.
While noting that no tariff would obviously be preferable, Nathan Serota of Bloomberg New Energy Finance has called these proposals “workable” for the U.S. downstream industry. He also noted that given the commissioner’s limitations, this was about the best outcome that this section of the industry could reasonably have hoped for.
Ultimately, these are only recommendations. The final decision on what form of trade action will be in the hands of the Trump Administration. Trump himself has shown a preference for aggressive trade action even against the closest U.S. allies, and is reported to have called for his chief of staff to “bring me some tariffs”.