SolarCity Corp (NASDAQ:SCTY) shares surged 2%, yesterday, after the World Trade Organization stated that U.S. tariffs have breached global trade rules, and the solar panel installer might be able to pay a lower price for Chinese products. According to the ruling, the U.S. levied high duties on Chinese steel and solar products. Also, WTO stated that U.S. needs to revise its duties on certain Indian steel products.SolarCity SCTY

SolarCity to benefit immensely

Solar industry is expanding rapidly both into the households as well for the commercial purposes, totaling to 74% of all new electric capacity installed in the United States, in the first quarter of 2014, according to a May report from GTM Research and the Solar Energy Industry Association.

Elon Musk’s SolarCity Corp’s installation business could benefit most after the verdict of the WTO as it relies substantially on Chinese solar imports. Last-month, SolarCity acquired the panel maker Silevo saying, “the massive volume of affordable, high-efficiency panels needed for unsubsidized solar power to outcompete fossil-fuel grid power.”

The United States levied tariffs on Chinese solar module exports in 2012 and added new preliminary tariffs for getting over the loophole related to the use of non-Chinese cells. Such measures were against the WTO pact signed in 1994.

The WTO panel agreed that U.S. should curb some of the duties, but at the same time it denied the Chinese accusation that the United States has raised the import cost very-high for importing the China-made solar panel in the country. The U.S. officials argued that the structure of the counter-tariff is to prevent the Chinese solar companies from getting the undue advantage through subsidies offered by the local government.

China welcomes the verdict

China’s trade ministry, MOFCOM is satisfied with the ruling, and said in a statement that China “urges the United States to respect the WTO rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises.”

Shares of the Chinese solar panel makers including SolarCity surged after the announcement of the WTO ruling, which is more in the favor of Chinese companies.

China’s Yingli Green Energy Hold. Co. Ltd. (ADR)(NYSE:YGE) surged 5.7% yesterday, in the last hour of trading while Trina Solar Limited (ADR)(NYSE:TSL) shot up 3.3%.