China’s solar manufacturers are evading United States tariffs by rerouting their production through three Southeast Asia countries, the Commerce Department reveals in a preliminary probe issued on Friday.
The Commerce Department opened the investigation in March after siding with the Chinese solar manufacturers in November 2021, turning down requests from American solar manufacturers to open such investigations.
According to the Commerce Department probe, BYD Hong Kong rerouted its production through Cambodia, Canadian Solar and Trina through Thailand, and Vina Solar through Vietnam out of China to specifically evade U.S. tariffs on China-made solar panels.
“This is an important win for the rule of law, American manufacturers, and the tens of thousands of workers that they employ,” Coalition for a Prosperous America (CPA) CEO Michael Stumo said in a statement.
The probe states:
Commerce examined a complaint alleging that eight solar companies that manufacture solar cells and modules are manufactured the components in the [People’s Republic of China], then sending those cells and modules to Cambodia, Malaysia, Thailand, and/or Vietnam for minor processing before being exported to the United States. [Emphasis added]
Such actions amount to an effort to evade the existing antidumping duty and countervailing duty orders on solar cells and modules from the [People’s Republic of China]. Today’s preliminary determination underscores Commerce’s commitment to holding the [People’s Republic of China] accountable for its trade distorting actions, which undermine American industries. [Emphasis added]
Some of the companies investigated by the Commerce Department did not respond to requests for information into their production lines and thus “will be found to be circumventing” U.S. tariffs, the probe states.
“These findings are preliminary, and as a next step, Commerce will conduct in-person audits in the coming months to verify the information that was the basis of its finding,” the probe continues.
In June, President Joe Biden announced a 24-month moratorium of U.S. tariffs on solar panel imports from Cambodia, Thailand, Vietnam, and Malaysia — the four countries from where Chinese manufacturers were accused of rerouting operations to evade tariffs from the start.
That announcement came after Biden decided to exempt foreign-made bifacial solar panels — the overwhelming majority of which come from China — from Section 201 tariffs on solar imports to the United States that were first imposed by former President Donald Trump in January 2018 at a 30 percent rate.
As a result, LG Electronics executives announced they would lay off their 220 American employees at the company’s Huntsville, Alabama, solar panel plant. LG Electronics opened the plant in 2018 after Trump announced U.S. tariffs on imported solar panels.
Stumo said Biden must now end its moratorium on U.S. tariffs on solar panel imports.
“… it is unconscionable that the White House wants to continue to give Chinese manufacturers a pass for illegally violating U.S. trade law to the detriment of American companies and American workers,” Stumo said.
From 2001 to 2018, U.S. free trade with China has eliminated at least 3.7 million American jobs. In 1985, before China entered the World Trade Organization (WTO), the U.S. trade deficit with China totaled $6 billion. In 2019, the U.S. trade deficit with China totaled more than $345 billion.
The total U.S. goods trade deficit in 2020 hit a record $915.8 billion. Research shows that every $1 billion in imports from a foreign country to the U.S. leads to American job losses. Meanwhile, American manufacturing remains vital to the U.S. economy, as every one manufacturing job supports an additional 7.4 American jobs in other industries.