The Obama administration moved Thursday to impose stiff new tariffs on solar panels made in China, finding that Chinese companies are improperly flooding the U.S. market with government-subsidized products.
The Commerce Department said Chinese producers had dumped solar cells and panels in the United States at margins ranging from 31 percent to nearly 250 percent. If the preliminary ruling is upheld, tariffs averaging 31 percent could be imposed on Chinese solar-panel imports.
The tariffs would be in addition to fees ranging from 2.9 percent to 4.73 percent imposed in March after the department found that China is improperly subsidizing its solar manufacturers.
The tariffs announced Thursday were higher than expected and could ratchet up trade tensions between the two countries.
Several U.S. solar panel makers, led by Oregon-based SolarWorld, had asked the government to penalize China for dumping low-price products on U.S. markets. The companies are struggling against fierce competition from China as well as weakening demand in Europe and other key markets, just as President Barack Obama is working to promote renewable energy.
U.S. companies' complaints about their Chinese rivals have been amplified by the controversy surrounding Solyndra Inc., a California-based solar panel maker that went bankrupt last year after winning a half-billion-dollar federal loan from the Obama administration.
Solyndra's collapse embarrassed Obama and prompted sharp criticism from Mitt Romney and other Republicans who are critical of Obama's green energy policies. Solyndra, which is not involved in the trade case, cited Chinese competition as a key reason for its failure.
A majority of U.S. solar panel installers oppose tariffs on Chinese panels, arguing that less expensive imports have helped make solar panels more affordable for U.S. customers.
The companies also worried that China could retaliate against U.S. companies, noting that Chinese authorities have announced their own probe into whether U.S. support for renewable energy companies hurts foreign suppliers.
"This is the first step to a trade war between the U.S. and China," said Jigar Shah, leader of a coalition of solar companies that oppose U.S. tariffs.
The Commerce Department decision will increase U.S. solar prices "precisely at the moment solar power is becoming competitive with fossil-fuel-generated electricity," said Shah, president of the Coalition for Affordable Solar Energy.
Members of the coalition include California-based SunEdison, Recurrent Energy, SolarCity and Westinghouse Solar, as well as China-based Suntech Power Holdings Co., one of the companies affected by the Commerce case.
SolarWorld president Gordon Brinser said the Commerce Department had merely confirmed that Chinese manufacturers have illegally dumped solar cells and panels in the U.S. market, giving their products an unfair advantage.
The ruling "will re-establish a natural balance in pricing that does need to occur in the global marketplace," Brinser said, adding that the U.S. solar market has been distorted by cheap Chinese imports.
SolarWorld Industries America Inc., a subsidiary of Germany's SolarWorld AG, is the largest U.S. maker of silicon solar cells and panels. The company was joined by six other manufacturers, including Wisconsin-based Helios Solar Works, in filing the unfair trade complaint.
Shah and other critics say steep tariffs will lead to the loss of thousands of U.S. jobs, but SolarWorld's Brinser dismissed that as "doomsday" talk.
Solar power is growing rapidly in the United States, he said, adding that demand for solar panels will continue to rise as states set standards for renewable energy and consumers see benefits from solar power.
Andrew Beebe, chief commercial officer for Suntech's California-based subsidiary, called the duties "not justified by fact."
The ruling sets up "harmful trade barriers" between the U.S. and China, Beebe said, adding that he hopes the two countries engage in "constructive dialogue" to avert a solar panel trade war.
"Suntech opposes trade barriers at any point in the global solar supply chain," he said in a statement. "We need more competition and innovation, not litigation."
Trade tensions with China are especially sensitive at a time when the United States and other Western economies want to boost technology exports to revive economic growth and cut high unemployment.
The U.S. and China are two of the world's biggest markets for solar, wind and other renewable energy technology. Both governments are promoting their own suppliers in hopes of generating higher-paid technology jobs.
Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee's subcommittee on trade, said the Commerce Department decision goes far beyond a dispute over solar panels.
"Free trade does not mean trade free from rules," Wyden said, calling the decision a boost for a rules-based global trading system. "A victory for that system is a victory for American workers and all others who don't need to cheat to compete," Wyden said.
In its ruling Thursday, Commerce also granted SolarWorld's request for a finding of "critical circumstances" to counter a recent flood of Chinese imports into the U.S. market ahead of the widely anticipated decision. As a result, preliminary dumping tariffs will be imposed retroactive to late February.
A final decision is expected in October.
Follow Matthew Daly's energy coverage on Twitter: http://twitter.com/MatthewDalyWDC