The US Department of Commerce (DOC) has imposed tariffs on multiple solar companies that attempted to bypass existing import duties on goods from China by completing their products in other Southeast Asian nations.

The DOC recently announced that subsidiaries of Chinese companies BYD, Trina Solar, Vina Solar, and Canadian Solar were evading US tariffs on Chinese solar cells and panels. These companies conducted minor processing to finalize their products in Cambodia, Malaysia, Thailand, and Vietnam.

Another company, New East Solar, will face tariffs after refusing to cooperate with an on-site audit of its operations in Cambodia.

To allow US solar importers sufficient time to adjust supply chains and ensure compliance with US law, the tariffs on companies found to be circumventing import restrictions will not take effect until June 2024, according to Fox Business.

Additionally, these tariffs provide support for US solar manufacturers, who have long struggled to compete with Chinese counterparts and are now receiving investment through President Biden’s Inflation Reduction Act. The Inflation Reduction Act includes substantial subsidies for the solar sector.

For more than a decade, the US has maintained anti-dumping tariffs on Chinese solar products following a previous investigation by the DOC that found unfair government subsidies were being provided to Chinese companies.

Solar companies that manufacture products in or source components from China have also faced allegations of using forced labor from persecuted Uyghurs and other predominantly Muslim ethnic minorities under the Chinese government.

Approximately 80% of US solar panel supplies come from Cambodia, Malaysia, Thailand, and Vietnam collectively. To comply with US import regulations, companies operating in these countries can undergo a certification process to demonstrate that they are not evading US tariffs. In this certification process, the companies demonstrate that they use solar cells and panels that contain non-Chinese wafers.

Solar industry companies and trade groups have expressed their opposition to the announcement made by the Department of Commerce (DOC), stating that the imposed tariffs will undermine the efforts of the Biden administration to promote the solar industry.

Trina Solar, a company that has made substantial investments in solar cell and module production in Thailand and Vietnam, strongly criticized the move. The company asserted that it will raise the overall costs of solar products bound for the United States because it will restrict supply at a time when solar demand is rapidly increasing.