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Exclusive: Biden Will Waive Tariffs For 24 Months On Solar Panels

President Joe Biden will announce a 24-month tariff exemption on solar panels.

WASHINGTON, June 5 – After an investigation froze imports and stalled projects in the United States, President Joe Biden will declare a 24-month tariff exemption for solar panels from four Southeast Asian countries on Monday, sources familiar with the matter told Reuters.

The move comes amid concerns about the impact of the Commerce Department’s months-long investigation into whether solar panels imported from Cambodia, Malaysia, Thailand, and Vietnam are being used to avoid tariffs on Chinese goods.

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

“There will be this safe harbour timeout on the… collection of duties,” the source said, “and that’s at the heart of what’s going to save all of these solar projects and ensure that they go forward.”

According to the sources, Biden will also use the Defense Production Act to spur future U.S. manufacturing of solar panels and other clean energy technologies with the help of loans and grants.

State governors, legislators, industry officials, and environmentalists have all expressed concern about the investigation, which could have resulted in up to 250 percent retroactive tariffs.

The situation presented a unique dilemma for the White House, which wants to show leadership on climate change, in part by encouraging the use of renewable energy, while also respecting and staying out of the investigation.

Taking executive action and invoking the DPA, which grants presidents some authority over domestic industries, allows Biden to use the tools at his disposal without jeopardising the Commerce Department’s investigation.

Biden’s proclamation, based on authority from a 1930 trade law, would apply only to the four countries and run concurrently with the investigation, according to a second source.

Tariffs could be imposed on panels imported after the 24-month period, depending on the outcome, but the threat of retroactive payments would be ruled out, according to the source.

“Regardless of the outcome of the investigation, if you bring the stuff in during that 24-month period, there will be no additional duties,” the second source said.

The investigation effectively halted the flow of solar panels, which account for more than half of all supplies in the United States and 80% of imports.

According to clean energy groups, it had a chilling effect on the industry, and some of them asked Commerce Secretary Gina Raimondo to dismiss it. Raimondo has stated that she lacked the discretion to sway the outcome.

In a statement, Abigail Ross Hopper, president of the Solar Energy Industries Association, said, “The president’s action is a much-needed reprieve from this industry-crushing probe.”

“The US solar industry can return to rapid deployment during the two-year tariff suspension window, while the Defense Production Act helps grow American solar manufacturing.”

The investigation, which was announced at the end of March, could take 150 days or more to complete.

Biden has previously used the DPA to address a shortage of infant formula in the United States, increase domestic production of key minerals for electric vehicle batteries, and test and produce vaccines to combat the COVID-19 pandemic.

The second source familiar with the situation said, “It is a tool to do what we obviously desperately need to do, which is rapidly grow the domestic manufacturing capacity” of solar panels.

“At this critical time for our energy sector, for our ability to support our consumers, and to address the climate crisis,” he added, the administration was “very focused on ensuring there are reliable and resilient supply chains.”

Biden’s goal of cutting U.S. greenhouse gas emissions by 50 percent to 52 percent by 2030, compared to 2005 levels, as well as decarbonizing the U.S. power grid by 2035, hinges on increasing renewable energy like solar.

In letters to Biden, 19 state governors, 22 senators, and dozens of members of the House of Representatives have expressed concern about the Commerce Department investigation.

“The start of this investigation is already causing massive disruption in the solar industry, and it will severely harm American solar businesses and workers, as well as increase costs for American families, as long as it continues,” one letter signed by senators Martin Heinrich, a Democrat from New Mexico, and Thom Tillis, a Republican from North Carolina, said.

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