The US government’s decision to double tariff rates on solar cells imported from China—raising them from 25% to 50%—highlights bipartisan support for protecting American industries. The move stems from concerns over how low-cost Chinese imports affect domestic manufacturing.
Doubled Tariff on Solar Cells
The Biden administration has doubled tariffs on imported PV cells from China, raising the rate from 25% to 50%. This measure also extends to semiconductors, electric vehicles (EVs), and EV batteries from China. The goal is to limit China’s access to the US clean energy technology market by effectively doubling duties on solar cells and quadrupling prices for Chinese EVs. According to a White House press release, “The tariff rate on solar cells (whether or not assembled into modules) will increase from 25% to 50% in 2024.”
The tariff increase on solar cells imported from China aims to address the country’s policy-driven surplus capacity, which distorts prices and stifles solar development outside of China.
China’s dominance in certain segments of the global solar supply chain—achieved through unfair practices—has hindered investment in solar manufacturing beyond its borders.
According to Brainard of the National Economic Council, China’s expected solar manufacturing capacity exceeds double the global demand in the short term. Similarly, Pol Lezcano, a senior solar analyst at BloombergNEF, commented before the White House announcement that the heightened tariffs on Chinese solar cells are unlikely to impede US solar deployments or manufacturing.
Solar Manufacturers Announce Major Investments
The Biden-Harris Administration is driving substantial investments into the U.S. solar supply chain. These efforts build on earlier government-supported research and development that helped create foundational solar cell technologies.
The Inflation Reduction Act provides tax incentives for solar components like polysilicon, wafers, cells, modules, and backsheet material. It also offers tax credits and financial support for utility-scale and residential solar projects.
Under President Biden’s “Investing in America” agenda, solar manufacturers have announced nearly $17 billion in planned investments—an eightfold increase in US manufacturing capacity. This expansion is projected to provide panels for millions of homes annually by 2030.
Increased Tariffs to Boost Domestic Solar Production
The increased tariffs on imported PV cells from China are intended to spur domestic solar production. With Chinese solar cells becoming more expensive, American manufacturers have a greater incentive to ramp up production, which can lead to more job opportunities and a stronger domestic solar industry.
White House officials state that the tariff increases are intended to foster fair competition for U.S. manufacturers in clean energy and microchips. This aligns with the Biden administration’s priority of closing the competitive gap with China through significant government investments in these sectors.
“At the end of the day, my goal is fair competition with China, not confrontation,” Biden said during a White House Rose Garden ceremony before signing a memorandum to enforce the tariff increases.
Incentives for Solar Adoption
Lawmakers at both the state and federal levels are increasingly supporting solar power to combat climate change. Many states have enacted renewable portfolio standards (RPS) laws, which mandate that utilities generate a portion of their energy from renewable sources and offer funding for solar incentives.
These incentives range from tax breaks and rebates to performance payments. The federal solar tax credit, for instance, can cover up to 30% of installation costs but is subject to the taxpayer’s income and total tax owed. States may also offer their own tax credits and exemptions.
Rebates, usually provided by utilities, reduce upfront costs and can affect the amount of the federal tax credit. Meanwhile, performance-based incentives reward solar system owners based on energy generation, often through Solar Renewable Energy Credits (SRECs).
These government incentives have spurred a significant increase in demand for solar installations across residential and commercial sectors. This rising demand has, in turn, led to a notable expansion of solar production capacity nationwide.
The growth of the US solar industry since 2008 has been remarkable, showcasing its resilience and importance in the nation’s energy landscape. Various states are contributing to this expansion, with California leading the charge. The distributed nature of solar production opportunities ensures that development is not concentrated in one region but spread across the country, offering widespread economic benefits and sustainable energy solutions.