Earlier this year, our team discussed how the current market and political conditions and module oversupply indicated a new Anti-Dumping and Countervailing Duties (AD/CVD) case seemed likely. Current intel suggests a new AD/CVD petition filing could come as early as late April. In addition, we think there is a high likelihood of the removal of Section 201 bifacial tariff exemption as early as June. What do we know about what tariffs may be coming, and what steps can you take now to mitigate risk?
Additional anti-dumping solar tariffs around the corner
Warning signs across the industry and market intel are pointing towards new AD/CVD cases that would include Cambodia, Malaysia, Thailand, Vietnam, and potentially India. The U.S. Department of Commerce (DOC) recently strengthened the enforcement of AD/CVD laws effective April 24, 2024, so a case filed shortly after this date would be subject to these enhanced regulations.
After a case filing, the DOC decides whether to initiate an investigation. Within 45 days of initiating an AD/CVD investigation, the U.S. International Trade Commission (ITC) must release a preliminary determination on whether imported materials have materially injured the domestic market.
The DOC then has 140 days for AD investigations and 65 days for CVD investigations to make their preliminary decision based on the statutory timeframe. If both preliminary determinations find injury to domestic industry, duties are collected. The investigation continues until the DOC issues a final ruling and AD/CVD rates.
While you may think 185 days is a long time to come to a preliminary ruling and start imposing tariffs, it’s important to note the DOC is also legally allowed to retroactively add tariffs for the 90 days before the preliminary determination. Even though we may not see preliminary decisions from new AD/CVD cases until Q3, there’s a possibility retroactive tariffs could start impacting purchases within the next few weeks. Solar tariffs on components coming from five countries that are critical to U.S. solar capacity will have a huge impact on the market. Buyers will want to do all they can to minimize their risk with upcoming procurements.
Potential removal of Section 201 bifacial exemption
What may be an even more pressing issue for module procurement is the potential end of the Section 201 bifacial exemption. In 2022, President Biden kept an exemption for bifacial panels in place while extending Section 201 tariffs through 2026. A few months later, President Biden also issued a temporary waiver on new AD/CVD tariffs to keep the solar supply chain needed for U.S. deployment from coming to a standstill due to uneasiness from the Auxin Solar tariff case.
While it may seem contradictory for President Biden to impose tariffs on bifacial panels while the solar tariff moratorium he implemented is in effect, the two-year tariff exemption is set to end on June 6, 2024. With additional domestic solar panel manufacturing now live and continuing to expand, experts view this June date as the end of a period of leniency by the Biden administration towards solar materials manufactured in Southeast Asia and expect the removal of the bifacial exemption around this time.
Options to mitigate risk
While we wait to see how new potential AD/CVD cases play out and if the Section 201 bifacial exemption remains in effect, there are a couple of ways to help mitigate your procurement risk. Although the window to purchase and get modules imported before the end of the temporary waiver period in June is shrinking, it has not closed entirely. If you are already in buying mode or can accelerate your procurement, you could avoid tariffs and the potential removal of the bifacial exemption by purchasing with a June delivery.
Additionally, there are modules that have already been imported to the United States available that can be purchased to avoid both of these risks if you are able to install them by December 3, 2024. Many of these products are aggressively priced due to the narrow window to install.
If a short buying or installation timeline is not possible, the best option is to purchase modules from countries that are not likely to be impacted by these tariffs. Even with modules assembled in the U.S., it’s critical to look holistically at the module supply chain and ensure it is traceable to avoid AD/CVD risk. Suppliers from countries that are likely to have limited exposure to these tariffs are going to be inundated with demand. It may be tough to find enough supply of Tier-1 options.
Though additional module choices may appear as the details of these tariffs settle, we think the best option right now is to buy before June and know you’ve done what you can to minimize exposure. You never know when another AD/CVD case could arise and impact additional countries, including those not currently in the conversation.
Get the support you need from Anza
Anza is here to help you make an optimal economic and risk reducing decision in this tumultuous environment. Our team is keeping our finger on the pulse of the market and paying close attention to new trade issues.
Within the Anza platform, you can filter available modules suitable for your project based on supply chain data and compare modules using our proprietary Anza Risk RatingTM scoring system, which categorizes AD/CVD, Counterparty, and UFLPA risk. We built this methodology from our multi-decade procurement experience and we conduct an ongoing assessment of the solar industry for up-to-date risk categorization, helping you lower the risk of project disruptions and unforeseen costs.
From easily comparing suppliers based on supply chain data and counterparty terms to navigating and reducing time in the shortlist and contracting process, we can help you choose the best product, get the best deal and minimize your risk of being impacted by new tariffs.
Curious about how Anza can help you evaluate risk?
