EXCLUSIVE: Biden waives 24-month tariffs on solar panels hit by probe

US President Joe Biden walks across South Lawn after disembarking from Marine One as he returns from Rehoboth Beach, Delaware, with the first lady at the White House in Washington, US, June 5, 2022. REUTERS/Elizabeth Frantz

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WASHINGTON (Reuters) – President Joe Biden will announce on Monday a 24-month tariff exemption for solar panels from four Southeast Asian countries, sources familiar with the matter told Reuters, after an investigation led to import freezes and projects in the United States.

The move comes amid concerns about the impact of a months-old Commerce Department investigation into whether imports of solar panels from Cambodia, Malaysia, Thailand and Vietnam circumvent tariffs on goods made in China.

One of the sources familiar with the White House plans said Biden’s action would reconcile companies’ concerns about having to hold billions of dollars in reserves to pay potential tariffs.

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“There will be this safe harbor respite in…the set of duties, and that’s at the core of what’s going to salvage all of these solar projects and ensure that they move forward,” the source said.

The sources said Biden will also implement the Defense Production Act to advance US manufacturing of solar panels and other clean energy technologies in the future, backed by loans and grants.

State governors, lawmakers, industry officials and environmental experts have expressed concern about the investigation, which could have resulted in retroactive tariffs of up to 250 percent.

The case has created a unique dilemma for the White House, which is eager to demonstrate US leadership on climate change, in part by encouraging the use of renewable energy, while respecting and staying away from investigative procedures.

Using the executive procedure and the DPA subpoena, which gives presidents some powers over domestic industries, allows Biden to take advantage of the tools at his disposal without interfering with a Commerce Department inquiry.

A second source said Biden’s declaration, which is based on the authority of the 1930 Trade Act, will apply only to the four countries and will be carried out in parallel with the investigation.

The source added that depending on its results, customs duties could be imposed on imported paintings after the 24-month period, but the threat of retroactive payments would not be on the table.

“If you bring things in within the 24-month period, regardless of the outcome of the investigation, there will be no additional duties,” the second source said.

The investigation essentially halted the flow of solar panels that make up more than half of US supplies and 80 percent of imports.

That has had a negative impact on the industry, according to clean energy groups, some of which have asked Commerce Secretary Gina Raimondo to exclude it. Raimondo said she had no discretion to influence this.

“The president’s action is a much-needed reprieve from the industry smash achievement,” Abigail Ross Huber, president of the Solar Energy Industries Association, said in a statement.

“During the two-year tariff suspension window, the US solar industry could return to rapid expansion while the Defense Production Act helps grow US solar manufacturing.”

Announced at the end of March, the investigation could take 150 days or more to complete.

Biden previously invoked the Environmental Protection Agreement to address the shortage of infant formula in the United States, increase domestic production of key metals for electric car batteries, and fight the COVID-19 pandemic through testing and vaccine production.

“It’s a tool to do what we clearly need to do, which is the rapid growth of local manufacturing capacity for ‘solar panels’,” said the second source familiar with the matter.

He added that management was “very focused on making sure we have reliable and resilient supply chains in place at this critical moment for our energy sector, and our ability to support our customers and address the climate crisis.”

Reliance on renewable energy such as solar is critical to achieving Biden’s goal of reducing US greenhouse gas emissions by 50% to 52% by 2030, versus 2005 levels, as well as decarbonizing the US power grid by 2035.

The Commerce Department investigation prompted 19 state governors, 22 US senators and dozens of members of the House of Representatives to express their concerns in letters to Biden.

It came in a letter signed by senators including Martin Heinrich, a Democrat from New Mexico, and Tom Telles, a North Carolina Republican.

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(Jeff Mason reports) Additional reporting by Nicola Groom. Editing by Clarence Fernandez

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