The United States imposes punitive tariffs on solar products from Southeast Asia
On May 20, local time in the United States, the United States International Trade Commission (ITC) unanimously passed a resolution to impose punitive tariffs on solar products from Cambodia, Malaysia, Thailand and Vietnam.
This resolution is like a boulder thrown into a calm lake, stirring up waves in the global photovoltaic industry.
According to the process, if everything goes well, the new tariff policy will be officially implemented as early as mid-June. By then, Cambodia will face a comprehensive tariff rate of up to 3529.33%, and Vietnam, Thailand and Malaysia will also be unable to escape and will have to bear high tariffs.
This move is not an isolated incident, but a continuation and escalation of the United States' trade restriction strategy on China's photovoltaic industry since 2012. Its wide range of influence will have a significant and far-reaching impact on the photovoltaic industry supply chain in Southeast Asia and even the world.
Looking back at history, the United States began to wield the stick of trade restrictions against China's photovoltaic industry in 2012, and a series of anti-dumping and anti-subsidy measures followed one after another, causing a sharp decline in China's exports of solar cells and modules to the United States. Faced with such severe trade barriers, many Chinese companies represented by Trina Solar and JinkoSolar have turned their attention to Southeast Asia for survival and development, and started the journey of capacity transfer.
For a time, Cambodia, Malaysia, Thailand and Vietnam became important footholds for Chinese photovoltaic companies to reconstruct the global supply chain, gradually forming an industrial structure of "Chinese technology + Southeast Asian manufacturing", and continuing to supply products to the US market in this roundabout way.
This round of US trade investigations on the four Southeast Asian countries has a long history. As early as February 2022, Auxin Solar submitted a petition to the U.S. Department of Commerce, accusing solar cells and modules assembled in four Southeast Asian countries and exported to the United States of being a means for Chinese companies to circumvent the U.S. anti-dumping and countervailing duty (AD/CVD) orders against China. This petition directly triggered the U.S. Department of Commerce to launch an anti-circumvention investigation.
In April 2024, the U.S. Solar Manufacturing Trade Alliance Committee, composed of local manufacturers such as Convalt Energy, First Solar, and Meyer Burger, once again submitted a new AD/CVD application to the U.S. Department of Commerce and the U.S. International Trade Commission, pointing the finger at photovoltaic cells and modules in four Southeast Asian countries, accusing them of dumping and accepting subsidies.
The following month, the U.S. Department of Commerce acted quickly and officially launched an anti-dumping and countervailing duty investigation, further demonstrating its increasingly tough protectionist stance in the field of photovoltaic trade.
The most direct and significant impact of the U.S. imposition of punitive tariffs on Southeast Asian solar products is on Southeast Asia's own photovoltaic industry. Taking Cambodia as an example, the comprehensive tax rate of up to 3529.33% makes Cambodia's photovoltaic products instantly lose their price competitiveness in the US market, and the order volume will inevitably fall like an avalanche.
Many related companies are facing huge operating pressure, and some companies may even break their capital chain and eventually go bankrupt. This will undoubtedly cause a devastating blow to the local photovoltaic industry ecology in Cambodia. A large number of employees are facing the risk of unemployment, and related upstream and downstream industries will also be seriously dragged down.
For Vietnam, Thailand and Malaysia, although the tax rate is slightly lower than that of Cambodia, it is still at an extremely high level. The average tax rate of 396% in Vietnam, 375% in Thailand, and 34% in Malaysia will also greatly compress the profit margins of enterprises, causing the share of photovoltaic products in these countries in the US market to shrink significantly. These countries have previously attracted a large amount of investment in the photovoltaic industry and built many production bases. Now, under high tariff barriers, they are facing a serious overcapacity crisis. In order to maintain operations, companies have to consider measures such as reducing production capacity and laying off employees, which has a great negative impact on local economic development and employment stability.
From the perspective of the global photovoltaic industry supply chain, the four Southeast Asian countries occupy an important position in the global photovoltaic industry, and once accounted for nearly 80% of the import volume of photovoltaic modules in the United States. Now the implementation of the new tariffs has put this supply chain system at risk of breaking.
On the one hand, the export of photovoltaic products in Southeast Asia has been blocked, and the construction progress of photovoltaic projects in the United States and other countries and regions that originally relied on the supply of products in the region will be seriously affected, which may lead to project delays or even shelving, and thus affect the pace of global clean energy transformation.
On the other hand, many companies that invest and set up factories in Southeast Asia, whether Chinese companies or other international companies, are facing huge cost pressures. In order to cope with high tariffs, companies have to re-examine and adjust their supply chain layout.
Some companies may choose to further transfer production capacity to regions that are not affected by tariffs, such as India, Indonesia and the Middle East, but this process requires huge capital and time costs, and there are many uncertainties as to whether the industrial supporting facilities and labor quality in the new regions can meet the needs of enterprises.
Some companies have also tried to obtain tariff exemptions by increasing the proportion of local procurement, but the US Department of Commerce's recognition of "cross-border subsidies" has greatly reduced the effectiveness of this strategy.
The domestic photovoltaic industry in the United States is also facing a complex situation. On the surface, domestic solar manufacturers in the United States seem to be the beneficiaries of this tariff policy, and are expected to take this opportunity to promote the development and recovery of the local industry, reduce dependence on imported products, and achieve industrial repatriation.
However, the US Solar Energy Industries Association (SEIA) holds a different view, believing that the new tariffs will significantly increase the cost of buyers of photovoltaic components. This is because photovoltaic products in Southeast Asia have obvious price advantages, and high tariffs have caused the prices of these products to soar. In order to obtain components, domestic photovoltaic project developers in the United States have to pay higher costs. This will not only compress the profit margins of developers, but may also cause some originally planned photovoltaic projects to be forced to abandon due to excessive costs. In the long run, it is not conducive to the healthy development of the US photovoltaic industry, and may even delay the process of the US clean energy transformation.
The US's imposition of punitive tariffs on Southeast Asian solar products has fully exposed the US's trade protectionism in the photovoltaic industry. The imposition of ultra-high tax rates on four Southeast Asian countries on the grounds of so-called "avoiding anti-dumping" and "unfair subsidies" is essentially an attempt to safeguard the interests of local U.S. photovoltaic companies and reconstruct the global photovoltaic industry structure to ensure the U.S.'s dominant position in this field.
However, this practice that violates market laws and free trade principles will not only fail to fundamentally enhance the competitiveness of the U.S. photovoltaic industry, but will also undermine the stability of the global photovoltaic industry supply chain and hinder the development of global clean energy.
For the affected Southeast Asian countries and related companies, actively seeking response strategies, strengthening international cooperation, expanding new markets, and adjusting industrial structures are the keys to survival and development in this trade storm.
For the global photovoltaic industry, how to build a more stable and sustainable supply chain system, promote technological innovation, and reduce costs in the context of rising trade protectionism will be an important issue facing future development.