The U.S. took decisive action late last week, finalizing a decision to impose import duties on the manufacturers of solar panels who, it has been reported, complete their products in Southeast Asian countries to sidestep tariffs on Chinese-made goods, according to an official from the Commerce Department.

The weight of these import duties is leveled not only against Chinese firms but also manufacturers that have completed minor processing tasks on solar panels and cells in Cambodia, Vietnam, Malaysia, and Thailand before exporting these to the U.S. Roughly 80% of U.S. panel supplies come from these countries.

The probe of the Commerce Department has pinpointed units of Chinese companies BYD, Trina Solar, Vina Solar, and Canadian Solar as key players circumventing U.S. tariffs on Chinese panels and cells through these practices.

For a decade, the U.S. has imposed anti-dumping duties on Chinese solar products, a response to a Commerce Department inquiry that exposed Chinese companies benefiting from disproportionate government subsidies that unnaturally deflated their prices.

Despite the opposition of solar panel purchasers reliant on affordable products completed overseas for their project’s competitiveness, the decision to impose the duties has been upheld. This determination echoes the preliminary verdict by the agency in December. The import duties will also extend to New East Solar, which denied compliance during an on-site audit of its Cambodian operations.

The implications of this decision are far-reaching as it is anticipated to hike the costs of virtually all U.S. solar products by constricting supply during a period of surging solar demand. Notably, Trina Solar voiced its disapproval of the Commerce Department’s resolution, considering its significant investments in cell and module production in Vietnam and Thailand.

Solar Energy Industries Association’s President Abigail Ross Hopper took a clear stand, opining that the U.S. Department of Commerce’s decision opposes the administrative clean energy objectives, expressing fundamental disagreement with their course of action.

Nonetheless, these import duties present a silver lining for the steadily diminishing U.S. solar manufacturing industry, which has repeatedly found itself unable to keep pace with Chinese goods. The domestic industry is currently enjoying renewed investment, courtesy of subsidies from President Joe Biden’s landmark climate change law.

The duties will come into effect from June 2024. President Biden’s foresight warranted a two-year grace period to guarantee sufficient panel supplies while U.S. production capacity is amped up.

It’s worth noting that companies operating in the aforementioned Southeast Asian countries aren’t completely cornered. They can go through a certification process to prove that they aren’t evading tariffs. To pass, solar cells and panels must be constructed using wafers and three other critical components that aren’t from China.

The solar industry has warned the new duties threaten to undermine the burgeoning solar manufacturing stimulated by the Biden administration’s Inflation Reduction Act. However, the tariffs indicate the U.S. government’s firm stand against tariff circumvention and its dedication to bolster the domestic production of clean energy technologies.