On Monday, China’s Ministry of Commerce imposed preliminary anti-subsidy tariffs on polysilicon imports for photovoltaics from select manufacturers in the U.S.: REC Silicon and Dow Corning’s Hemlock Semiconductor. The anti-subsidy tariffs are on top of the anti-dumping duties that the Chinese Ministry of Commerce imposed on the same manufacturers in July, bringing the combined tariffs on polysilicon against them as high 63.5 percent. The move is the latest in a solar trade war that has been escalating between the two countries since 2011.
In earlier reports from the Wall Street Journal, Reuters and other news sources, it was assumed that the new preliminary anti-subsidy tariffs of 6.5 percent replaced previously announced preliminary anti-dumping tariffs. That’s not the case.
"China has, in fact, announced an additional tariff on materials from most U.S. polysilicon suppliers which goes into effect this Friday (Sept. 20), which essentially threatens to shut out the entire industry. China has, in effect, launched an all-out trade war on solar products," explains William Perry is a Partner with Dorsey & Whitney LLP, who formerly worked at the U.S. International Trade Commission. China previously imposed anti-dumping tariffs on polysilicon imports of 53 percent on Hemlock and 57 percent on REC Silicon, a subsidiary of Norway’s REC.
In a Sept. 18 press release, the ministry released an announcement (not available in English at this point) that says "during the investigation period of this case, there were subsidies to the products under investigation and China’s domestic industry was substantially damaged and there was casual relationship between the subsidy and substantive damages.” As such, starting on Sept. 20, Chinese importers of Hemlock and REC polysilicon will be subject to paying the tariffs.
The tariffs are widely seen as China’s retaliation to tariffs imposed by the U.S. last year on Chinese PV imports. Last year the U.S. imposed anti-dumping duties on Chinese imports that ranged between 18.32 percent and 249.96 percent on Chinese PV imports, as well as anti-subsidy duties that ranged from 14.78 percent to 15.97 percent. But Perry, who also writes a blog tacking the issue, tells SolarReviews that it’s grown into a bigger issue. “The solar case is now a political issue between the two countries,” Perry said, adding that it's also a symbol to the Chinese of what’s gone wrong with trade between the two countries.
Meanwhile, China’s PV manufacturers have largely found a way around the U.S.-imposed tariffs by having some of their polysilicon wafers manufactured or finished in Taiwan, then shipping it back to China for final assembly into PV modules before importing it into the U.S. It’s a sidestep that allows the companies to continue to keep the costs of their modules lower for solar installers and was likely allowed since the U.S. was a leading importer of polysilicon to China. Perry explains that the value of the U.S. imports of polysilicon into China is roughly $2 billion, while the imports of Chinese PV to the U.S. was roughly $4 billion.
The looming uncertainty has already cost the U.S. manufacturing jobs. “Hemlock Semiconductor, the third-largest polysilicon producer, announced plans in January to lay off 400 employees at its Michigan and Tennessee plants, citing an oversupply of solar panels and the potential for Chinese tariffs,” according to an Aug. 18 article in the Seattle Times. Likewise, REC said the trade issues caused it enough uncertainty as far back as January of 2013 to delay a $1 billion capacity expansion at its Moses Lake plant in Washington.
While the newest duties from China are currently preliminary, Perry anticipates they will become the final tariffs. “It depends on whether there’s a deal negotiated between the U.S. and China,” he says.
Supposedly the U.S. and China, as well as Europe (which has had its own issue with Chinese PV imports) have been working to reach an agreement. But as it stands, the commerce agencies in the U.S. and China aren’t seeing eye-to-eye.