US President Biden announces presidential decree expanding tariff quota for photovoltaic products to 12.5 GW

On 8/12, US President Joe Biden announced a presidential decree expanding the tariff quota (TRQ) quota for some photovoltaic power generation products from the current 5 gigawatts (GW) to 12.5 GW.

Safeguards are tariff hikes and import quantity restriction measures initiated by the importing country government when imports of a certain product increase rapidly and damage the industry in the importing country, and are recognized by WTO safeguard agreements. In 2018/2, the former Trump administration invoked safeguard measures against some photovoltaic power generation products based on section 201 of the 1974 Trade Law, assuming that the rapid increase in imports of some photovoltaic power generation products was causing damage to domestic industries. After that, President Biden extended the measures for 4 years in 2022/2, and decided to double the import volume of photovoltaic cells that do not impose tariffs with TRQ from 2.5 GW to 5 GW.

According to the current presidential decree, a petition was issued by the industry in 2023/9 requesting that TRQ be abolished and solar cell imports made tariff-free, or that the TRQ framework be expanded from 5GW to 20GW per year due to insufficient production volume within the United States. In addition to this, the report by the US International Trade Commission (ITC) was also taken into account, and President Biden decided to expand to 12.5 GW of the TRQ framework. If the president determines that industries within the United States have made positive adjustments to import competition based on sections 203 and 204 of the 1974 Trade Act, measures can be reduced, changed, and terminated by submitting a petition requesting changes in safeguard measures from a majority of major domestic industries. President Biden determined that the industry made aggressive adjustments based on announcements of solar cell production plans within the United States and improvements in multiple indicators related to finance, trade, and employment. The range of expansion falls short of requests from the industry, but it has expanded from 7.5 GW announced in May.

Target items include solar cells [US Tariff Classification Number (HTS code) 8541.42.0010] and modules (8541.43.0010). It is effective for items imported after 8/1 at 0:1 a.m. EST, and is not subject to tariffs due to safeguard measures unless it exceeds 12.5 GW.

President Biden has set climate change countermeasures as the main policy goal, and is actively supporting the introduction of renewable energy through tax credits etc. under the Inflation Reduction Act (IRA). From May to June, it was announced that 2 years had passed since the IRA was established and production volume within the United States had expanded, and the end of the “solar bridge,” which exempts imports of photovoltaic power generation related products from the four countries of Cambodia, Malaysia, Thailand, and Vietnam, etc. would end. However, this time, we have decided once again on measures to encourage an increase in the import volume of products related to solar power generation. It seems to be a decision that shows the current state of the Biden administration, which is shaken between the spread of renewable energy and the expansion of production within the United States.

(Note) If TRQ is exceeded, the tariff rate is 14.75% for the 1st year (2022/2 to 2022/2), 14.5% for the 2nd year (2022/2 to 2024/2), 14.5% for the 3rd year (2024/2 to 2025/2), and 14% for the 4th year (2025/2 to 2026/2).