China Fires Back on Solar Panel Tariffs

China Fires Back on Solar Panel Tariffs

On Thursday, the Commerce Department imposed tariffs on Chinese solar panel imports, spurring the latest chapter in trade disputes between the U.S. and China as well as accusations of protectionism by Beijing.

With the tariffs set at 30 percent-plus targeted at top Chinese exporters, they came in higher than anticipated. Two companies especially hit hard included Suntech Power Holdings Co Ltd (NYSE:STP) and Trina Solar Ltd (NYSE:TSL) at about 31 percent.

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Now analysts believe Chinese companies will either manufacture elsewhere or seek out alternative markets.

In a statement by China’s Ministry of Commerce on its website, spokesperson Shen Danyang, said, “The US decision lacks fairness and China expresses its strong displeasure. By deliberately provoking trade friction in the clean energy sector, the U.S. is sending the world a negative signal about trade protectionism.”

But Beijing did not threaten retaliation.

Foreign Ministry spokesman Hong Lei said, according to The Christian Science Monitor, “We believe these measures by the United States damage China-U.S. cooperation in the renewable and clean energy sectors … We hope the United States can appropriately resolve the relevant issues and take practical steps to respond to China’s demands.”

In this election year, President Barack Obama has said he will crack down on what he considers is unfair Chinese trade practices.

Thursday’s tariffs follows punitive duties that has already been imposed on Chinese steel pipe, pencils, electric blankets and bedspring imports. Also under investigation since March is whether imports of stainless steel sinks are being sold at unfairly low prices.

Meanwhile, Chinese officials have said they will impose trade duties on U.S. shipments of polysilicon, according to The Christian Science Monitor, which is main material in solar panels, should the U.S. penalize Chinese solar companies.

In a report by Deutsche Bank, it said, “The anti-dumping ruling increases the risk of retaliatory action by Chinese government on U.S. polysilicon imports into China.”

Currently, China’s solar companies encompass more than 60 percent of market worldwide, while the U.S. market stands at 20 percent of sales for China’s biggest solar panel manufacturers.

They rely heavily on subsidized U.S. and European markets, which has drawn criticism that Chinese state-run banks loans and its low prices gave an unfair advantage to companies.

Look for this battle to not end anytime soon.