The United States is falling into unprecedented policy confusion over whether to continue to impose tariffs on solar products from the four Southeast Asian countries and finally suppress China. U.S. media reported on May 5 that U.S. President Joe Biden is expected to use the presidential veto power to veto the new bill just passed by the U.S. Senate and House of Representatives in order to maintain his decision a year ago to suspend tariffs on solar products from four Southeast Asian countries.
Experts interviewed by the Global Times reporter said that the root cause of US policy confusion and multi-party struggles is that China has an absolute advantage over the US in the field of solar energy. Against this background, there has been mutual entanglement and repeated struggles within the United States between the political demands of getting rid of its dependence on China and the realistic needs based on economic interests. But in any case, political performance cannot stop the objective laws of economic development.
There is an apparent conflict between the US Congress and Biden’s position
The reporter noticed that the confusion in the United States over whether to end the tariff exemption for the four Southeast Asian countries to limit China’s solar energy is greater than the suppression of other high-tech fields in China.
On March 28, 2022, the U.S. Department of Commerce, at the request of the U.S. solar energy company OXIN Solar, suspected that Chinese solar companies were avoiding tariffs by setting up factories in four Southeast Asian countries and exporting to the United States and decided to initiate an investigation. Due to the major damage that this move would cause to the entire industry, Biden decided to implement a two-year tariff exemption on June 6 of the same year. In December 2022, the U.S. Department of Commerce’s investigation came out, claiming that Chinese solar companies were trying to circumvent U.S. tariffs by producing and processing in Cambodia, Thailand, Malaysia, and Vietnam before shipping the products to the U.S.
This has triggered an impulse in the United States to abolish the Biden administration’s tariff exemption policy. On April 28, the U.S. House of Representatives voted 221 to 202 to end the solar tariff exemption bill for the four countries in Southeast Asia. Subsequently, the U.S. Senate passed the bill with 56 votes in favour and 41 votes against on May 3. During the period, the White House issued a statement saying that Biden would not hesitate to use the presidential veto to veto the bills passed by the two sessions.
According to the Global Times reporter’s observation, there have been obvious conflicts between the positions of the US Congress and President Biden over whether to impose tariffs on solar products from the four Southeast Asian countries, and differences have also emerged within the Democratic Party. Not only that. The U.S. Department of Commerce and the Department of Energy also have policy confrontations, and photovoltaic manufacturers and application providers are also in a difficult situation.
U.S. can’t afford tariffs
In 2011, the U.S. Department of Commerce imposed additional tariffs on Chinese solar products in the name of anti-dumping, resulting in a rapid decline in U.S. imports of solar products from China, while imports from Cambodia, Malaysia, Thailand, and Vietnam surged. The data for 2022 shows that the U.S. relies heavily on imports of solar modules, of which less than 5% come from China, but more than 80% come from factories of Chinese companies in Southeast Asia.
He Weiwen, executive director of the China Institute of International Trade and chief expert of the expert committee, said in an interview with the Global Times reporter that although the solar energy industry originated in the United States, China currently occupies an absolute leading position in the entire industry. Data show that in 2021, China will have 72% of the world’s polysilicon production capacity, 98% of silicon ingots, 97% of silicon wafers, 81% of cells, and 77% of module production capacity. Although Biden authorises the use of the Defence Production Act to accelerate domestic solar module manufacturing in the United States when he makes tariff exemptions in 2022, there is still a huge gap with China’s accumulated advantages over the years. He Weiwen said that, whether from the perspective of quality or cost, it is a better choice for the United States to import Chinese photovoltaic products.
Bloomberg stated in a signed article on May 3 that imposing additional tariffs on Chinese solar energy is a burden that the United States cannot afford. At a time when the U.S. is trying to stop global warming, fight inflation, and stave off recession, imposing high tariffs on solar products is like running in an Olympic sprint with 20-pound weights strapped to your ankles.
The article believes that the cost of solar energy in the United States is the highest in the world, largely due to the country’s tariff policy. Instead of helping U.S. manufacturing, tariffs will only slow down the energy transition and hurt the U.S. economy.
US media outlet CNBC cited data from the US Solar Energy Industry Association this week as saying that if the tariffs on the four Southeast Asian countries are resumed, it will increase the cost of US solar energy applications by US$1 billion, resulting in the layoff of 34,000 employees and reducing the industry’s total revenue of US$4.2 billion. According to US media reports, a group of senators led by Democratic Senator Jackie Rosen wrote in an open letter on May 2 that repealing the tariff moratorium would be “a devastating blow to the US solar industry. It will kill jobs, raise energy costs, and reduce America’s ability to achieve clean energy independence.”
Political performances cannot stop economic laws
But some politicians in the United States do not care about the interests of the industry and end users. According to US media reports on May 5, the chairman of the House Ways and Means Committee and Republican Representative Jason Smith issued a statement on May 4 urging Biden to sign the bill to stop tariff exemptions for the four Southeast Asian countries.
Bloomberg said in a report that the new bills in the Senate and House of Representatives will slow down the transition to clean energy in the United States and undermine the effect of the Inflation Reduction Act, which happens to be one of Biden’s signature achievements. The White House also said in a statement that it “strongly opposes” the legislation and would veto it if passed.
Regarding the tariff issue between the four Southeast Asian countries, the internal struggle in the United States is raging. He Weiwen told the “Global Times” reporter that the solar energy industry started in the United States, but with the passage of time, China has become a global leader after years of development. Too far behind. He Weiwen said, “If American politicians have professional knowledge, they should understand that this industrial division of labour is irreversible. Therefore, all they can do now is make politically correct political performances.”
He Weiwen said that from steel to automobiles, it has experienced a development law of multi-country cooperation from the United States to the global division of labour. Regarding the solar energy industry, the United States should also respect this law instead of wantonly undermining the stability and security of the global production and supply chain and arbitrarily violating world trade rules on the grounds of national security.