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Biden Administration announces 24-month duty exemption for solar imports from Cambodia, Malaysia, Thailand, and Vietnam

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08 June 2022

On June 6, the Biden Administration announced a two-year duty exemption for solar products from Cambodia, Malaysia, Thailand, and Vietnam (together, CMTV), as well as authorization for the use of the Defense Production Act to expand domestic production of solar products.  The White House issued a Fact Sheet detailing the various actions, which arrive in the midst of the Department of Commerce’s (the DOC’s) circumvention inquiry on solar products from CMTV.

Previously, on April 1, 2022, the DOC initiated a country-wide circumvention inquiry to determine whether imports of solar products completed in CMTV are circumventing existing antidumping duties and countervailing duties targeting solar products from China.  The inquiry followed the DOC’s receipt of a petition from Auxin Solar, which alleged that CMTV exporters are fully integrated with upstream affiliates in China and use Chinese inputs in their operations to such an extent that solar products from CMTV are circumventing current duties.

Prior to yesterday’s announcement, if the DOC had issued an affirmative determination in the inquiry (i.e., determined that CMTV solar products are indeed circumventing the duties applicable to China), DOC could have applied existing duties to imports of CMTV solar products retroactively.  Such duties could have required US solar importers to pay duties of up to 250% on previous imports, a possibility that many in the US solar industry believe has created a “chilling effect” on new projects.

In issuing the Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia (the Declaration), the Biden Administration sought to allay near-term concerns about the potential for retroactive and future tariffs on CMTV solar products.  The Declaration affirms that solar energy is “critical to reducing our dependence on electricity produced by the burning of fossil fuels” and states that the shortage of solar modules “has abruptly put at risk near-term solar capacity additions.”  To address the “threats to the availability of sufficient electricity generation capacity to meet expected customer demand,” the Declaration requires the Secretary of Commerce to take appropriate action to permit, for 24 months, the duty-free importation of solar cells and modules exported from CMTV.

The DOC released a statement announcing its intent to issue regulations to temporarily permit duty-free access to solar cells and modules from CMTV for up to 24 months, in line with the Declaration.  The DOC also clarified that the circumvention inquiry would proceed, and that any decision to impose duties on CMTV products as a result of an affirmative determination would apply once the two-year emergency period is over. As reported by Reuters based on comments from a source inside the Biden Administration, the possibility of retroactive tariffs on CMTV products “would be off the table.”

Separately, President Biden authorized the Department of Energy (the DOE) to use the Defense Production Act to expand domestic production capability for solar cells and modules “to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.”  The President’s determination enables the DOE to execute purchases from and investments in companies that comprise the US solar industry.