Presidential Action Triggered by Crisis in the U.S. Solar Industry

In recent months, the U.S. solar industry has been in the midst of an existential crisis, triggered by the threatened imposition of retroactive and future tariffs on a significant portion of U.S. imports. That crisis began on April 1, 2022, when the Department of Commerce (“Commerce”) initiated an inquiry to determine whether solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam are circumventing antidumping (“AD”) and countervailing duty (“CVD”) orders on solar cells from China. Solar cells from these countries generally accounted for approximately 80% of U.S. solar module imports in 2020.[1] If Commerce finds circumvention, solar cells and modules from the four target countries could not only be subject to combined AD/CVD tariffs approaching 250%, but Commerce’s regulations also allow for the agency to apply these tariffs retroactively to merchandise entering on or after April 1, 2022 (and potentially as far back as November 4, 2021). This threat of AD/CVD tariffs triggered a steep decrease in imports of solar cells and modules from Southeast Asia, and caused parts of the U.S. solar industry to come to a stand-still, furthering domestic reliance on coal.[2] Given this paralysis in the solar industry, lawmakers and others urged the President to provide relief from potential AD/CVD tariffs.[3]

The President’s Response

On June 6, 2022, President Biden issued a declaration of emergency (the “Declaration”)[4] pursuant to section 318(a) of the Tariff Act of 1930, as amended (19 U.S.C. § 1318), and issued a determination pursuant to section 303 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4533) (“the DPA Determination”)[5]. The Declaration finds that an emergency exists “with respect to the threats to the availability of sufficient electricity generation capacity” and authorizes Commerce to issue a moratorium on tariffs on solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam for up to a 24-month period, while the DPA Determination aims to “expand the domestic production capability” for solar cells during this 24-month period. The Declaration itself does not prevent the imposition of tariffs on imported solar cells and modules from the Southeast Asian countries, rather it authorizes the Secretary of Commerce to “take appropriate action” to permit the duty-free importation of solar cells and modules for 24 months after the Declaration’s issue date.[6]

The President’s use of section 318(a) to authorize a moratorium on import tariffs due to a national emergency appears consistent with the text of this statutory provision. Section 318(a) states:

Whenever the President shall by proclamation declare an emergency to exist by reason of war of otherwise, he may authorize. . . the Secretary of {Commerce} . . . to permit, under such regulations as the Secretary . . . may prescribe, the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work.[7]

While rarely invoked, section 318(a) was recently used by President Trump to reduce certain burdens on the importation of personal protective equipment during the COVID-19 pandemic.[8] There are other examples of prior Administrations suspending imports tariffs under this provision.[9]

In addition to issuing the Declaration, President Biden invoked the Defense Production Act for solar cells and modules, as well as for: insulation, electric heat pumps, transformers (and electric grid components), electrolyzers, fuel cells, and platinum group metals. The White House indicated that the DPA Determination is intended to: accelerate domestic production of clean energy technologies, including solar panel parts and put the full power of federal procurement to work spurring additional domestic solar manufacturing capacity by directing the development of master supply agreements, including “super preference” status.[10]

The President’s emergency action does not impact existing AD/CVD tariffs on imports of solar cells and modules from China and Taiwan including such modules assembled in countries other than China or Taiwan using cells from China or Taiwan.

What Can We Expect from Commerce?

On the same day the Declaration was issued, Commerce issued a press release in which Secretary Raimondo indicated that Commerce “will issue regulations to temporarily permit for up to 24 months duty-free access to solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam.” The Assistant Secretary of Commerce for Enforcement and Compliance, Lisa Wang, who is responsible for AD/CVD determinations, similarly stated: “no solar cells or modules imported from Cambodia, Malaysia, Thailand, and Vietnam will be subject to new antidumping or countervailing duties during the period of the emergency.”[11]

Commerce is expected to formalize the moratorium on these AD/CVD tariffs through a regulation. Given the emergency nature of this action, it is likely that Commerce will promulgate this regulation without notice and comment, in a matter of days or weeks prior to the expected date of the preliminary determination in the circumvention inquiry, August 29, 2022. 

It is worth noting that any moratorium on these AD/CVD tariffs by Commerce is not intended to impact Commerce’s findings in the circumvention inquiry. Commerce may still find that solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam are circumventing AD and CVD orders, in which case tariffs would presumably start to apply after the expiration of the emergency period.

Do These Actions Solve the Crisis for the U.S. Solar Industry?

Given the President’s Declaration and Commerce’s statements, it appears very likely that no new AD/CVD tariffs on solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam will be imposed during the next 24 months regardless of the outcome of the circumvention inquiry. The Declaration thus has the potential to create the tariff predictability that the U.S. solar industry needs in order to continue importing solar cells and modules using solar cells made in the four target countries.

However, U.S. solar cell producers have already indicated that they are considering a legal challenge to the moratorium on these tariffs. As noted above, the President’s action appears consistent with the statute, and courts typically defer to the President during times of emergency. Given this deference, such a legal challenge is unlikely to be successful, and because of the time typically needed to bring such a challenge, also unlikely to be resolved prior to Commerce’s August preliminary determination.

Unfortunately, even the mere threat of litigation creates some uncertainty for the U.S. solar industry. In litigation challenging AD/CVD tariffs, courts routinely issue retroactive remedies. Thus, in the unlikely event that a challenge to the Declaration is successful, courts could subject solar cells and modules to AD/CVD tariffs retroactively, particularly if procedural steps are taken to enjoin final assessment of tariffs on solar cells and modules during the pendency of any litigation. 

There is greater uncertainty regarding the level of tariffs on imports after the expiry of the 24 month emergency period (or sooner in the seemingly unlikely event the President ends the state of emergency). If Commerce finds circumvention, tariffs may immediately go into effect on solar cells and modules from Cambodia, Malaysia, Thailand, and Vietnam as soon as the emergency ends, and it is unclear what rates might apply at that point. Normally, foreign exporters and producers are able to participate in administrative reviews of AD/CVD orders to establish their own company-specific rates rather than paying the general, country-wide AD/CVD rates, which under the China order are roughly 250% (combined). However, it is unknown whether Commerce will permit exporters/producers from the Southeast Asian countries to participate in reviews during the emergency, given that their merchandise is not expected to be subject to tariffs at the time it is imported. Thus, in mid-2024, presuming the emergency ends at that point, the U.S. solar industry could find that the threat of very high AD/CVD tariffs once again sharply reduces the supply of solar cells and modules in the U.S. market. 

If understanding the President’s or Commerce’s actions on solar cells or the potential tariff risks for solar cell and module imports is important to your company, Covington is well positioned to assist. We have a group of attorneys who are well versed in these trade laws and have decades of experience helping clients navigate the tariff risks created by AD/CVD orders.

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If you have any questions concerning the material discussed, please contact the following members of our International Trade and Energy practices: Shara Aranoff, Alexander Chinoy, William Isasi, Andy Jack, and Jay Smith.


[1] Letter from Sen. Heinrich, Sen. Lujan, Rep. Stansbury, and Rep. Fernández to President Biden (May 9, 2022).

[2] See, e.g., Joe Deaux and Jennifer A. Dlouhy, Tariff Fight Paralyzing US Solar Threatens American Steel (2), Bloomberg (June 6, 2022); Keith Goldberg, Utility Says Solar Tariff Probe Will Delay Coal Closures, Law360 (May 4, 2022); N.M. Congressional Democrats Call On President Biden To Expedite Solar Tariff Investigation Impacting Jobs, Investments In New Mexico, ForeignAffairs.co.nz (May 13, 2022).

[3] Evan Halper, White House Takes Steps to Spur Solar Industry, Wash. Post (June 6, 2022), https://www.washingtonpost.com/business/2022/06/06/solar-panel-white-house-tariffs/ (“Several Democratic senators expressed alarm on a call with top White House officials late last month, during which they pressured the White House to intervene.”).

[4] White House, Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia (June 6, 2022).

[5] White House, Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components (June 6, 2022).

[6] White House, Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components (June 6, 2022) (“the Secretary shall consider taking appropriate action under section 1318(a) of title 19, United States Code . . . .”).

[7] (empahsis added)  While the text of this provision references the “Secretary of the Treasury,” the notes clarify that the provision today applies to the Secretary of Commerce who is the official that administers U.S. AD/CVD law.

[8] White House, Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak (Mar. 13, 2020).

[9] See Proclamation 2545, Free Importation of Jerked Beef By The President Of The United States Of America: A Proclamation, 7 Fed. Reg. 2611 (Apr. 7, 1942) (President Roosevelt issuing Proclamation authorizing duty-free importation of jerked beef into Puerto Rico to avoid famine in Puerto Rico).

[10] White House, FACT SHEET: President Biden Takes Bold Executive Action to Spur Domestic Clean Energy Manufacturing (June 6, 2022).

[11] U.S. Dep’t of Commerce, Department of Commerce Statement on President Biden’s Proclamation on Solar Cells and Modules, (June 6, 2022), https://www.commerce.gov/news/press-releases/2022/06/department-commerce-statement-president-bidens-proclamation-solar-cells.


Photo of Shara Aranoff Shara Aranoff

Shara Aranoff helps clients in technology, life sciences, and manufacturing use intellectual property and international trade enforcement tools to compete in U.S. and global markets.

Photo of Alexander Chinoy Alexander Chinoy

Alexander Chinoy assists clients with the resolution of international intellectual property and trade disputes, appearing before a range of U.S. courts and agencies. He is an accomplished trade litigator who has been involved in more than 30 Section 337 unfair import investigations before…

Alexander Chinoy assists clients with the resolution of international intellectual property and trade disputes, appearing before a range of U.S. courts and agencies. He is an accomplished trade litigator who has been involved in more than 30 Section 337 unfair import investigations before the U.S. International Trade Commission (ITC), as well as a range of enforcement and regulatory matters involving U.S. Customs and Border Protection (CBP) and the U.S. Department of Commerce. Alex has been recognized as a leading Section 337 litigator by Chambers USA, with sources noting he is “impressive beyond his years of practice.”

Alex is a past President of the ITC Trial Lawyers Association, the leading bar association for Section 337 practitioners. He has hands-on experience with every phase of Section 337 investigations. He has participated in a dozen hearings at the ITC ranging from trials on violation to enforcement hearings and temporary relief proceedings. His experience spans every phase of 337 litigation, from pre-complaint counseling through appeal of final ITC determinations to the U.S. Court of Appeals for the Federal Circuit (CAFC), as well as CBP enforcement of ITC exclusion orders.

Alex has additional administrative experience before CBP, including classification and compliance matters, as well as before the U.S. Department of Commerce. His broader litigation experience includes district court intellectual property cases, and a range of trade disputes before the U.S. Court of International Trade. He has successfully argued appeals before the U.S. Court of Appeals for the District of Columbia Circuit and the CAFC. Alex has also counseled foreign governments and multinational companies on the use of trade policy tools to resolve international IPR issues and other business disputes, as well as regarding IPR border measures and enforcement remedies outside the United States.

Photo of William Isasi William Isasi

William Isasi has more than 20 years of experience advising governments and companies on all aspects of antidumping and countervailing duty proceedings and World Trade Organization (WTO) litigation. In private practice, he has represented companies in the aircraft, steel, oil and gas, chemical…

William Isasi has more than 20 years of experience advising governments and companies on all aspects of antidumping and countervailing duty proceedings and World Trade Organization (WTO) litigation. In private practice, he has represented companies in the aircraft, steel, oil and gas, chemical, paper, and ball bearing industries, and successfully secured low antidumping and countervailing duty tariffs for his clients. He also advises U.S. companies on the viability of petitioning for antidumping or countervailing duty orders. He joined the firm after serving as an Assistant Chief Counsel at the U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement & Compliance. In that role, he provided extensive legal advice on trade enforcement to the Assistant Secretary for Enforcement & Compliance, Deputy Assistant Secretaries, and other Department officials.

Photo of W. Andrew Jack W. Andrew Jack

Andrew Jack has a diverse corporate and securities practice with clients principally in the energy, industrial manufacturing, technology and sports and entertainment industries. He regularly represents corporations, board committees, and other forms of enterprises in mergers and acquisitions, strategic alliances, financing activities, securities…

Andrew Jack has a diverse corporate and securities practice with clients principally in the energy, industrial manufacturing, technology and sports and entertainment industries. He regularly represents corporations, board committees, and other forms of enterprises in mergers and acquisitions, strategic alliances, financing activities, securities law compliance, corporate governance counseling, and executive compensation arrangements. Mr. Jack also co-chairs the firm’s Energy Industry Group.

Photo of Jay Smith Jay Smith

Jay Smith is of counsel in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and…

Jay Smith is of counsel in the Washington office. He joined the firm after several years as a professor of political science and international affairs, during which he specialized in international trade policy and international dispute settlement. His practice in the International and Litigation groups draws on this academic and policy experience.

He is currently helping clients develop and implement strategies with regard to the Trump Administration’s recent trade actions, including pursuing country exemptions and product exclusions to the recent steel and aluminum tariffs imposed under Section 232, and product exclusions to the proposed Section 301 tariffs.