The United States confirmed steep import duties on solar products from China and Taiwan on Tuesday in a decision that may inflame trade tensions between the two countries.
Anti-dumping duties for Chinese goods were set as high was 165.04 percent as the U.S. arm of German solar manufacturer SolarWorld seeks to close a loophole which allowed Chinese producers to sidestep duties imposed in 2012.
Taiwanese producers face anti-dumping duties as high as 27.55 percent, according to the final Commerce decision, which SolarWorld said raised average duties for Chinese producers but lowered them for Taiwan. Producers in China face separate anti-subsidy duties.
"These remedies come just in time to enable the domestic industry to return to conditions of fair trade," said SolarWorld Industries America President Mukesh Dulani.
The move is set to deal a heavy blow to China and Taiwan's solar panel shipment to the U.S. market in the short term, Chinese solar industry officials say. Shares of Chinese solar panel manufacturers like Hareon Solar and Shunfeng International fell more than 2 percent on Wednesday morning, underperforming broader markets.
In anticipation of the decision, some Chinese companies have been preparing to set up factories overseas to sidestep the U.S. anti-dumping duties.
"In the next few months, we are expected to see some changes in the industry. Some companies will set up plants in southeast Asia or south America," said Jessica Jin, solar analyst at IHS in Shanghai.
The U.S. decision, which will affect companies including China's Trina Solar Ltd and Suntech Power and Taiwan's Motech Industries Inc, may sour the mood at annual U.S.-China trade talks in Chicago, which started on Tuesday. The handling of excess capacity in the solar industry is one issue on the agenda.
In August, China suspended imports of polysilicon, a raw material used in solar panels, in reaction to surging imports from the United States and other countries.
The Solar Energy Industries Association, which represents both solar panel producers and installers that rely on cheap imports, said it would continue to work on a negotiated solution. "It's time to end this costly dispute," said President Rhone Resch.
Solar manufacturers have recovered over the last two years from a battering caused by an influx of products from China and a reduction in European subsidies as solar markets in the United States, Japan and China have surged and producers went out of business or reduced output.
U.S. imports of solar products from China were worth $1.5 billion in 2013, half the level of 2011, while imports from Taiwan more than doubled to $657 million over the period, according to Commerce data.
Many solar panel installers have warned the duties will push up prices.
"Today's decision ... will undercut the growth of American solar jobs, hurt the American solar industry and make it more difficult for solar technology to compete against fossil fuels," said Coalition for Affordable Solar Energy President Jigar Shah.
The duties must still be confirmed by the U.S. International Trade Commission, which will make its final decision by Jan. 29.