Chinese PV-inverter suppliers have uttered a sigh of relief, at least for now, thanks to U.S. agreement to withhold plan for raising tariff on US$200 billion worth of China-made goods for the U.S. to 25% for 90 days.
As a result of the agreement, reached between Donald Trump and Xi Jinping during G20 summit meeting on Dec. 1, China-made PV inverters will be subject to 10% tariff for the time being, which was put in place in July this year, under Section 301. The existing tariff was kicked in July, following a lapse of two months, after the U.S. government suspended steep 30% tariff imposed on 2.5 GW PV products imported from China on Jan. 22, under Section 201, which was to drop by 5% annually over a four-year period.
During the 90-day truce of the trade war, the U.S. and China will negotiate over such practices of China as mandatory technology transfer, IP protection, non-tariff barriers, Internet hacking, and data stealth. Should they fail to reach an agreement, the tariff will be raised to 25%.
For PV inverter makers in China, including Enphase, Huawei, Sungrow, Ginlong, Goodwe, Growatt, and Sanjing, the three-month truce offers a precious breather, during which they can reconsider their market deployment, including moving industrial chains out of China. Enphase reported previously that its partner Flex plans to start producing PV inverters in Mexico in Q2 2019.
At 25% tariff, it may not be worthwhile to produce PV inverters in China, from cost angle. Scott Moskowiztz, analyst at market information body GTM Research, reported that presently, China--made residential and industrial PV inverters boast over 80% and 50% market shares, respectively, in the U.S.
Abigail Ross Hopper, president and CEO of SEIA, pointed out that the 90-day truce is insufficient to solve core issues of the trade war, adding that existing agreement addresses only issues related Section 310 and doesn't cover Section 201 on PV cells and modules, Section 232 on steel, or antidumping and countervailing tariffs.
(First photo is an illustration diagram, source: The White House from Washington, DC [Public domain], via Wikimedia Commons; written by Daisy Chuang)