After concluding that the Chinese government provided illegal subsidies to domestic solar panel makers, the U.S. Commerce Department on Tuesday said it would impose countervailing duties on the imports of Chinese crystalline silicon photovoltaic (PV) cells and modules. But the tariffs were smaller than some solar companies had petitioned for, ranging at 2.9% to 4.73%, depending on which company manufactured them.

Specifically, Wuxi Suntech Power Co., Ltd., received a preliminary tariff rate of 2.90%, Changzhou Trina Solar Energy Co., Ltd., received a rate of 4.73%, and all other Chinese producers/exporters received a rate of 3.61%. Additional tariffs could be imposed later this year as the Commerce Department decides on whether China has “dumped” solar panels into the U.S. market at prices below their actual cost. That allegation had been made by the Coalition for American Solar Manufacturing (CASM). The preliminary determination in the anti-dumping case, which has been postponed, is now due on May 17, 2012.

“Despite the relatively small size of these tariffs, this decision has broad implications for international trade, renewable energy, and U.S. manufacturing,” said national law firm Ballard Spahr.

According to the firm, the countervailing duties are retroactive for 90 days before this ruling because the Commerce Department previously found that a major increase in imports occurred ahead of the possible imposition of duties. “As a result, U.S. Customs and Border Protection will collect a cash deposit or bond from importers of Chinese PV equipment based on these preliminary rates, applicable to all entries of Chinese solar cells made up to 90 days prior to this ruling. Deposit or bond posting obligations would continue until a final countervailing duties decision is issued,” it said.

The decision, which stems from what is being deemed the most comprehensive review by a U.S. government agency of how China uses subsidies to gain a foothold in an industry, also sheds light on imports of solar modules and panels produced outside China that have been manufactured with Chinese-made solar cells.

The Commerce Department’s decision incited a range of reactions from the solar industry.

"The extremely low level of subsidization is surprising and undermines the Obama administration and industry claims that Chinese subsidies have crippled the U.S. solar industry," White & Case International Trade Attorney Scott Lincicome told POWERnews. "Although there’s still a long way to go before this case is finished, [the] decision will undoubtedly please the Chinese government and remove some of the sting from the new U.S. law on countervailing duties and ‘non-market economies.’”

"Today’s announcement affirms what U.S. manufacturers have long known: Chinese manufacturers have received unfair and [World Trade Organization (WTO)]-illegal subsidies," said Steve Ostrenga, chief executive officer of Helios Solar Works in Milwaukee, Wis., a founding manufacturer of CASM. CASM has alleged that an estimated $30 billion in solar subsidies furnished to domestic manufacturers by the Chinese government caused at least 12 domestic producers to undertake layoffs, go bankrupt, or close plants in all regions of the U.S. over the past two years.

The Coalition for Affordable Solar Energy (CASE), a group of about 70 companies that set up their own alliance to counter CASM claims, said it the decision “clearly demonstrates that the Commerce Department did not find the Chinese government engaged in massive subsidization, as SolarWorld and CASM claim.”

“[The] preliminary determination by the Department of Commerce imposing low tariffs on imported solar cells and modules is a relatively positive outcome for the U.S. solar industry and its 100,000 employees,” said CASE President Jigar Shah. “However, tariffs large or small will hurt American jobs and prolong our world’s reliance on fossil fuels. Fortunately, this decision will not significantly raise solar prices in the United States as SolarWorld has sought.”

Rhone Resch, president and CEO of the Solar Energy Industry Association (SEIA), meanwhile, said that industry group was “supportive of a rules-based process for resolving trade disputes in the solar industry. “It is important to note that this is a preliminary determination and the antidumping decision will be rendered in May. If the tariffs remain at these levels, we do not think that this will have a material impact on the U.S. market,” he said.

The trade action against Chinese imports is indicative of a “growing trend” of trade conflict in the global solar energy industry that threatens to curtail the rapid growth the solar industry had seen in the market—both in the U.S. and abroad, Resch added, however. “Governments and industry must recognize that while trade remedy proceedings such as antidumping and countervailing duty investigations are an important part of the global trade rules, so too are collaboration and negotiations,” he cautioned.

Sources: POWERnews, Commerce Department, Ballard Spahr , SEIA