An investigation has found that four Chinese solar manufacturers are evading U.S. tariffs by pushing their products through Southeast Asian countries, reports The New York Times. The companies were having products assembled in Cambodia, Thailand, Malaysia, and Vietnam and then exported to the U.S., according to the Department of Commerce.
The investigation began at the request of a small solar manufacturer in California which claimed that it was facing financial strain because of competitors using illegally sourced Chinese materials, The Washington Post reports. As a result, substantial evidence was found that China was dumping heavily subsidized materials into the American market through Southeast Asia, which doesn't face the same tariffs.
"Today's preliminary determination underscores Commerce's commitment to holding the PRC accountable for its trade-distorting actions," the Commerce Department said in a statement. These findings could potentially worsen the already-tense relationship between the U.S. and China, Bloomberg writes. The country has maintained that it has genuinely invested in Southeast Asia manufacturing and that it is not just an evasion scheme.
The investigation has caused also tension between commercial stakeholders. Companies that regularly import solar technology opposed the investigation, arguing they would not be able to keep up with demand without the imports and that it would inhibit the country's ability to meet climate goals because of higher prices. On the other hand, domestic solar manufacturers and Republicans have criticized the Biden administration for not taking a strong enough stance on China's practices.
Since the investigation began in June, the Biden administration said that any penalties would not take place until 2024, giving importers time to adjust.