Martial Arts "US IRA Supports Domestic Solar Industry"

Report Published on the US-China Solar Trade Dispute and the Impact of the IRA

Source=Korea International Trade Association

[Asia Economy Reporter Kim Pyeonghwa] There is a claim that the United States increasing sanctions on Chinese solar products and implementing the Inflation Reduction Act (IRA) could be a boon for domestic solar companies. Given that the largest export market for Korean solar cells and modules is the U.S., the expectation that the scale of local solar power installations will increase is also seen as a positive factor.

On the 17th, the Korea International Trade Association's International Trade and Commerce Research Institute released a report titled "U.S.-China Solar Trade Dispute and the Impact of the IRA: An Unconventional Trade Part 2" containing these findings.

According to the report, the U.S. sanctions on Chinese solar products and the implementation of the IRA are creating a favorable external environment for domestic solar companies.

The report states that since 2012, the U.S. has imposed additional tariffs and quotas (quantity restrictions) on Chinese solar products. Starting this year, the U.S. has comprehensively banned imports of products using components manufactured in the Xinjiang region, which accounts for 45% of global polysilicon (raw material for solar modules), citing forced labor concerns.

As a result, the share of Chinese solar products in U.S. imports has significantly decreased, with Korean and Southeast Asian products filling the gap. In fact, the share of Chinese solar cells in U.S. solar product imports dropped from 42.6% in 2011 to 0.2% last year. Meanwhile, Korean cells increased from 1.9% to 47.8% over the same period. Cells from four Southeast Asian countries including Vietnam and Thailand also rose from 0.1% to 45.4%.

The report also noted that with the IRA, if requirements such as factory installation and production within the U.S. are met, related tax credit benefits can be received, so competitive domestic companies in the residential and commercial solar markets are expected to benefit. The fact that the U.S. is the largest export market for Korean solar cells and modules, and that local solar power installation capacity is projected to grow significantly from 45 gigawatts (GW) before the IRA to about 105 GW by 2030, is another positive factor.

Attention is also focused on the preliminary determination results of the U.S. investigation into circumvention exports of Chinese cells and modules to be announced at the end of next month. If it is recognized that China has circumvented exports through Southeast Asian countries, tariffs will be imposed on Southeast Asian products, allowing domestic companies to reap indirect benefits. In the past, the U.S. imposed anti-dumping tariffs on Taiwanese solar products due to their connection with Chinese circumvention exports, resulting in a sharp decline in the import share of Taiwanese cells and modules.

Cho Sanghyun, head of the Korea International Trade Association's International Trade and Commerce Research Institute, stated, "The U.S. solar industry is expected to grow significantly due to IRA tax benefits,” adding, “Our government should take this opportunity to support domestic solar manufacturing capabilities, including tax support, so that our companies can accelerate their entry into the U.S. and other global solar markets.”

This content was produced with the assistance of AI translation services.