The U.S. solar power industry (along with China) has been on its toes since a coalition of solar panel manufacturers filed an anti-dumping complaint last fall. The U.S. Department of Commerce placed mild tariffs on Chinese solar manufacturers in March, but continued to investigate to see if these companies are illegally distorting the market. Today, we finally have a decision.

Many sources are confirming the United States Commerce Department has placed tariffs upward of 30% on solar panels imported into the U.S. from China. In a recent news release SolarWorld reports:

The U.S. Department of Commerce issued anti-dumping duties of 31.14 percent on imports of solar cells and panels from Suntech, 31.22 percent from Trina Solar, 31.18 percent from other companies that had requested but not received individual duty determinations and 249.96 percent from all other Chinese producers, including those controlled by the Chinese government.

The department also announced that in light of a massive, evasive surge of imports ahead of the determination, these new duties would apply retroactively 90 days. As a result of this determination of so-called critical circumstances, importers of Chinese solar products must post bonds or cash deposits in the full amounts of anti-dumping duties on imports from now forward as well as back to mid-February.

SolarWorld’s response: SolarWorld, which lead the coalition of solar module manufacturers in filing the trade cases last fall,  sees the solar policy decision as a way to restore industry competition.

“Today, SolarWorld and the many industry players who embrace the sustainable efficiency gains and price declines that come from fair competition can take heart that the U.S. government is standing up against Big China Solar,” said Gordon Brinser, president of SolarWorld Industries America Inc. and leader of the Coalition for Solar Manufacturing (CASM) in the release. “Commerce’s careful measures could help thwart China’s illegal drive to control the solar market and supplant manufacturers and jobs in America, the very country that invented, pioneered and innovated solar to today’s mainstream viability.”

Brinser attributes many layoffs and bankruptcies of U.S. solar manufacturing companies to China’s trade practices. He predicts the the tariffs will help grow domestic solar manufacturing and fair global competition and so boost U.S. jobs and energy security.

These tariffs are in addition to anti-subsidy tariffs of about 3 to 4% imposed in March. One may think this would make Chinese solar manufacturers not so happy. It’s certainly not positive news, but it was not unexpected.

What this means to Chinese solar manufacturers: This decision has been looming for months, giving Chinese companies some time to regroup and prepare for the worst. Many of these companies are completely capable of manufacturing outside of China in places such as Taiwan. For some of them, manufacturing outside of the country is even cheaper.

But one implication that could be painful for Chinese companies involves third-party engineering assessments. In order to get a loan, banks require plants to be inspected by a third-party to ensure bankablilty. The third party writes a report, making sure the company is performing quality practices. This process can take at least four months and can be expensive.  If a company moves to a new location it will need a new assessment. This is where Chinese companies who move their manufacturing may experience setbacks.

What this means for the U.S. Market:While Brinser sees the tariffs as a move that will boost the U.S. solar industry, others are not so sure. Robert D. Hansen, president and CEO, Dow Corning Corporation & Andrew E. Tometich, president, Hemlock Semiconductor Group have a different view on the matter, which they have stated in a recent release:

We understand that the U.S. Department of Commerce’s (DOC) preliminary finding in the SolarWorld trade case regarding imports of Chinese-made solar panels is intended to protect the U.S. market. We believe, however, that the consequences of this decision will have exactly the opposite effect, proving to be devastating to the growth and adoption of solar technology in the U.S., job growth, as well as to our competitive leadership of this industry worldwide.

This decision will make it more expensive and difficult for the U.S. to have access to the most proven and cost-effective solar technologies –weakening the U.S. solar industry at a critical point in its development. Indeed, while Bonn, Germany-based Solar World and its co-litigants may initially benefit from this decision, the industry overall in the U.S. will suffer – some economists believe that thousands of U.S. jobs could be lost, about half tied directly to the industry.

As global companies, Dow Corning and Hemlock Semiconductor understand the importance of fair trade practices. This is a complex issue; at the same time, our nascent economic recovery, as well as this industry’s potential for delivering long-term economic value and energy independence, require a long-term solution that enables all countries and the businesses operating in these countries the opportunity to benefit from the growth of this technology.

In our view, both the U.S. and China will benefit by removing barriers to trade and promoting collaboration and open trade policies rather than introducing measures or litigation that impose trade barriers. Resolving trade concerns through an adversarial confrontation serves only to impede technological advancement and job creation, as well as the path towards energy independence and clean energy.

I’m also hearing this response from other companies. For instance, Steve Grippi of Clenergy thinks the news is a bit scary.

“It’s like socks and shoes,” he says. “We (the racking companies) are the socks and Chinese solar modules are the shoes. If the price of shoes goes up significantly, there’s no need for the socks.”

Grippi says many of his company’s projects are now completely on hold because of the decision. Solar racks are sitting empty waiting for panels that may not come. This also means tens of thousands of jobs are now on hold including installers, system integrators and engineering companies, which is why he views this decision as counterproductive.

“In a perfect world, sure it’d be great to manufacture everything here at home, but that’s not the reality of things,” says Grippi. “I view China as another state. We get our oranges from Florida because that’s the best place for oranges. We get cars from Detroit because that’s the best place for manufacturing cars. And we get our solar panels from China because that’s the best place to make solar panels.”

In regard to the assumption that people will now buy American solar panels instead, Grippi notes that the tariffs make the cost of Chinese solar modules about the same as those made in the U.S. He says a major problem is that the U.S. doesn’t have the manufacturing capacity to fill the demand.

“We may have the capacity in three to five years, but by that time billions of dollars and thousands of jobs will be lost,” he says. “In China you can build a plant in three months because of their subsides and government policies. Here, there are so many restrictions (having plans approved, environmental reports, and more) so it takes longer. Also, without any projects, we won’t even have the revenue to build these manufacturing plants.”

Grippi views Chinese solar panels as an inexpensive component that makes U.S. solar projects work. He says without them wouldn’t have grid parity and so China should not have been penalized.

It’s not over till it’s over: After today’s ruling, Commerce will immediately initiate a final, more in-depth phase of its investigation, including examinations of solar operations and financial records in China. “We look forward to seeing Commerce’s careful investigations and findings continue to develop through September,” says Brinser.