On January 22, 2018, President Trump announced his intention to impose a tariff-rate quota on imported crystalline silicon photovoltaic solar cells and modules under Section 202 of the Trade Act of 1974 (19 U.S.C. § 2252), as recommended by the International Trade Commission (the “ITC”) in the Suniva Inc. and SolarWorld Americas, Inc. trade matter, Investigation No. 201-075. See Proclamation 9693, To Facilitate Positive Adjustment to Competition from Imports of Certain Crystalline Silicon Photovoltaic Cells (Whether or Not Partially or Fully Assembled into Other Products) and for Other Purposes, 83 Fed. Reg. 3541 (Jan. 23, 2018).  The President ordered the implementation of a declining four-year tariff-rate quota with the following terms:

 

Year 1

 Year 2 Year 3

Year 4

Safeguard Tariff on Modules and Cells

 30% 25% 20% 15%
Cells Exempted from Tariff 2.5 gigawatts 2.5 gigawatts 2.5 gigawatts

2.5 gigawatts

 

Each year, the applicable tariff will be assessed on solar cell imports in excess of the 2.5 gigawatt quota.  See 83 Fed. Reg. 3549. The tariff-quota is scheduled to take effect at 12:01 a.m. eastern standard time on February 7, 2018. See id. at 3543.

Domestic solar cell and module manufacturers that are able to increase production without significant capital outlays will likely benefit from the new tariff. However, most observers agree that the four-year remedy period may be too short to generate significant capital investment in new solar cell and module manufacturing capacity.

On the developer side, rising solar cell and module equipment costs resulting from the tariff will increase operation and maintenance expense of existing projects and impact the bankability of future projects. The trade remedies will also dilute the effectiveness of federal tax credits available for solar energy projects, which are largely slated to be phased out by the end of 2021.

 

About the Author:

Joshua Porte is an Associate in Dickinson Wright’s Nashville office, where he focuses on providing transactional and regulatory legal services primarily relating to the construction, commercial real estate, and energy industries. Josh also advises clients regarding environmental matters in connection with mergers and acquisitions and real estate development. Through his construction practice, Josh has developed experience in working with the American Institute of Architects forms and construction and design agreements. Josh may be reached in our Nashville office at 615-620-1712 or via email: jporte@dickinsonwright.com. View his bio here.