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11 Jan 2023

Econ Digest

What will happen to Thailand’s exports of solar cell products to the U.S. after the preliminary investigation, suggesting the circumvention of AD/CVD measures?


        The United States (U.S.) is Thailand’s largest export market for solar cell products, accounting for more than half of the export market share in recent years, but such exports are now facing challenges from the U.S. investigation into Chinese manufacturers’ circumvention of anti-dumping and countervailing duty (AD/CVD) measures. To be specific, the U.S. Department of Commerce announced the results of its preliminary investigation in early December 2022, which found a number of Chinese manufacturers had established production bases in Thailand, Malaysia, Vietnam and Cambodia, to circumvent U.S. AD/CVD measures. As a result, Thailand is at risk of being subject to 16-254% of import duties, the same rates imposed on Chinese companies under the AD/CVD measures. However, the final results will be announced by May 2023 and become effective from June 2024 onwards, after a 2-year tariff exemption granted by the U.S. presidential order comes due, in order to buy time for  U.S. renewable energy businesses to make adjustments.

        KResearch views that in 2023, Thailand’s solar cell product exports to the U.S. might see a limited impact, thanks to the tariff exemption granted by the U.S. presidential order that allows U.S. renewable energy businesses to continue importing products from existing trading partners. Thus, Thailand’s solar cell product exports to the U.S. should tend to grow in line with U.S. clean energy investments, mainly driven by the recent enactment of the Inflation Reduction Act in the U.S. in mid-August 2022. The Act offers tax benefits for the business sector and rebates for the household sector to incentivize the installation of clean energy systems, especially solar cell products, to reduce carbon emissions and the electricity cost that rises along with fossil fuel prices. KResearch projects that the value of Thai solar cell exports to the U.S. in 2023 may grow by 57%, accelerating from an estimated growth of more than 50% in 2022.

        However, the impact of the U.S. AD/CVD measures may become evident by 2024, when U.S. renewable energy business operators could consider changing their trade partners in solar cell products in order to prepare for increased import tariffs that will take effect by mid-2024. The U.S. is expected to remain reliant on imports of solar cell products, and South Korea, which is not subject to the investigation and currently ranks the 4th largest share in the U.S. solar cell product imports, is likely to emerge as a major competitor for the share of exports to the U.S. Meanwhile, the extent of impact on Thai solar cell product exports to the U.S. will depend on the timing and the results of Thai manufacturers’ submission of evidence to the U.S. authorities to clear such allegations.

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