The US Department of Commerce has determined that the Chinese government is providing subsidies to Chinese solar companies with factories in Vietnam, and has decided to significantly increase tariffs on Chinese solar products imported from Vietnam. The combined tax rate for some companies may exceed 360%, pending final determination by the US International Trade Commission.
The US Department of Commerce recently announced that its investigation found that the Chinese government is providing cross-border subsidies to Chinese solar factories in Vietnam, thereby reducing the production costs of these companies. Based on this determination, the department has decided to significantly raise the countervailing duties on Chinese solar products imported from Vietnam.
The adjustment of countervailing duties on Vietnamese solar products by the Department of Commerce is based on the preliminary ruling announced on December 1st last year. Vietnam is currently the largest source of solar module imports for the United States, so this tariff increase will have a particularly significant impact on the manufacturing operations of Chinese companies in Vietnam. According to the latest adjustments, the import tariffs for some well-known Chinese solar companies have approached or even exceeded 100%.
In the trade investigation, the US Department of Commerce found that the Chinese government is providing core raw materials such as silicon wafers and photovoltaic glass to Chinese companies with factories in Vietnam at below-market prices, which constitutes improper government subsidies. Although trade litigation typically involves complex legal and economic analyses and is somewhat controversial, according to international trade rules, government subsidies are not necessarily illegal unless they lead to undue intervention by the exporting country’s government in the domestic industry of the target market, thereby affecting fair competition.
The background of this tariff increase is that the US solar manufacturing industry has been continuously pushing for anti-circumvention investigations against Chinese companies in recent years, hoping to prevent Chinese companies from circumventing the tariff barriers previously established by the United States on Chinese solar products through Southeast Asian countries. In addition to countervailing duties, the US Department of Commerce also imposes anti-dumping duties on these companies to offset the impact of low-priced imports on the US domestic industry.
