USTR has completed the evaluation of comments to its 4-year Section 301 tariffs review report
It plans to continue with a 50% tariff imposition on imported Chinese solar cells
It has also proposed increasing tariff rates on polysilicon and wafers to 50% in 2025
Manufacturing equipment exclusion announced for solar cell and wafer production
The Office of the United States Trade Representative (USTR) has largely maintained the modifications to the Section 301 tariffs as announced in May this year, with some updates, in its final action on China tariffs following the statutory 4-year review as published on September 13, 2024.
In its May 2024 review report on Section 301 tariffs, the Joe Biden Administration said it will double the tariff rate on Chinese solar cell imports from 25% to 50%. The report also proposed exclusions for some solar PV production equipment which was then open for public consultation (see US Government To Increase Tariffs On Imported Solar Cells).
The final modifications were released following the review of more than 1,100 comments received.
In the final action announced, the 50% tariff on solar cells is maintained, while proposing increasing tariff rates for subheadings 2804.61.00 and 3818.00.00 to 50% in 2025. The products included under these headings are polysilicon and wafers for solar cell and semiconductor manufacturing.
The USTR plans to publish a separate notice to invite views on increasing tariffs for these 2 semiconductor categories.
Its rationale is that “China’s dominance in the manufacturing of wafers and polysilicon is likely to undermine new investments in domestic manufacturing, impede the resiliency of U.S. supply chains for solar cells and semiconductors, and undermine the effectiveness of the tariffs on solar cells and semiconductors.”
The USTR adds, “Increasing tariffs on the two proposed subheadings will encourage the diversification of supply chains and will lessen dependence on China for these products, providing additional leverage with China to eliminate the investigated acts, policies, and practices.”
Additionally, following a 30-day consultation period for 19 proposed temporary exclusions for solar manufacturing equipment, it received about 80 views. The temporary exclusions included 5 exclusions for equipment to manufacture solar modules, 6 exclusions for equipment to manufacture solar cells, and 8 exclusions for equipment to manufacture solar wafers.
The USTR’s final determination is to not adopt the 5 exclusions covering solar manufacturing equipment for solar modules since respondents believe there is enough equipment available outside of China.
As for solar cell and wafer production equipment exclusions, since there is not enough availability outside of China, the remaining 14 exclusions will be adopted. This exclusion period, said the USTR, will allow the US to reduce its reliance on Chinese cell manufacturing equipment with the development of helpful strategies.
“Regarding requests for a longer retroactive period for the exclusions for solar manufacturing equipment, the U.S. Trade Representative has determined to make the exclusions effective January 1, 2024, and through May 31, 2025. The additional time will support those investments in domestic production that were made in 2024, but prior to USTR’s announced proposals,” reads the USTR document.
The USTR will launch a comment period for the proposed modification of tariff rates on the exclusion process for wafer and polysilicon tariffs.
Reactions from the industry and other stakeholders have swiftly come in. The Coalition for a Prosperous America (CPA) welcomed the strategic action calling China tariffs an essential tool for reshoring and strengthening domestic production. It now demands more action to strategically decouple from China by revoking China’s Most Favored Nation (MFN) status. This alone will create 2 million new American job, it claimed.
The National Electrical Manufacturers Association (NEMA) Managing Director of Global Policy Fred Fischer demands the government look at the impact on the downstream sector. He said, “While we appreciate that USTR took additional time to review the 1,100 public comments it received on its proposed tariff process, we continue to urge the Administration and Congress to request a transparent and comprehensive investigation of the economy-wide effects of the Section 301 duties, including the impact on downstream industries, U.S. investments, U.S. competitiveness, U.S. exports and imports, and the long-term impacts on the U.S. economy.”