The Commerce Department has started new antidumping investigations into Chinese and Taiwanese photovoltaic modules with the potential of closing a big loophole in existing tariff regulations and driving up prices for U.S. consumers.

The Jan. 23 decision is the latest development in a long-simmering dispute over claims that solar modules made in China are sold in the U.S. at prices lower than their fair value, which constitutes dumping. A separate countervailing duty investigation concerns financial assistance from foreign governments that unfairly benefit foreign companies.

The U.S. ruled in 2012 that Chinese manufacturers were getting unfair subsidies from their government and dumped modules on the market here, according to an article in the The New York Times. The government imposed duties of between 24% and 36%, but they applied only to modules that were made with Chinese solar cells. Chinese companies were able to get around the duties by using cells produced elsewhere, especially Taiwan.

According to the Commerce Department, the U.S. International Trade Commission (ITC) should make a preliminary ruling by Feb. 14. If the ITC determines there is a “reasonable indication” Chinese or Taiwanese imports hurt the domestic market, the probe continues. Proceedings wouldn’t be wrapped up until later in the year.

The petition for the new Commerce Department investigations came from SolarWorld, an American subsidiary of a German company. The company, which said it is the largest U.S. producer of solar panels, said it was acting for the industry as a whole.

“We’re finishing the job of presenting the facts to our trade regulators to prevent China from further damaging yet another manufacturing industry and another rich base of employment,” SolarWorld President Mukesh Dulani said in a written statement posted at the company’s website. China obviously recognizes the key importance of solar-technology manufacturing to future economic competitiveness. But we do, too.”

Dulani said that if fair competition could be restored, the U.S. solar industry “will return to growth.”

Impact on U.S. markets could be significant

Modules from China and Taiwan are a big part of the U.S. market. Chinese imports were valued at about $2.1 billion in 2012, and imported Taiwanese panels were worth another $513 million, according to a fact sheet from the Commerce Department.

Chinese suppliers currently supply between 50% and 60% of the installed photovoltaic capacity in the U.S., says Michael Barker, a senior analyst with NPD Solarbuzz, a market research company.

“So if the trade investigation were to extend further up the production chain that could have a significant impact on the U.S.,” Barker said in a telephone interview, “as it would cut off the largest supply of PV components into the U.S. market in many ways or make it much more expensive, depending on the level of duties imposed.”

Buyers could be forced to pay more for Chinese modules or switch to a higher-cost supplier.

“Either way,” he said, “the cost to the end market would increase.”

Shayle Kann, senior vice president of research at Greentech Media, sounded a similar note of alarm in a blog posted at its Greentech Media on Jan. 13.

“This petition could significantly impact the U.S.solar market, in large art because of its scope,” Kann wrote. “In contrast to the initial tariffs, which apply only to crystalline silicon PV cells manufactured in China, this petition broadens the scope both geographically (adding Taiwan) and vertically (adding both wafers and modules).”

An interconnected, global market

The new U.S. antidumping probe isn’t an isolated event in an industry with a global reach. The Chinese, for example, imposed stiff tariffs on polysilicon produced in the U.S., which triggered cancellations of orders at plants here.

“The solar PV industry is very much a global industry in that there are multiple supply chains and supply routes servicing different things,” Barker said. The prospect of trade barriers worries producers, because they don’t know where they’ll be able to sell their products, and developers and buyers downstream, because they don’t know how much things will cost.

“The uncertainties of these sorts of investigations can be really damaging to the industry,” Barker said.

Low-cost Chinese modules have been an enormous strain on U.S. manufacturers, but whether new import duties would give a boost to the industry remains to be seen. The U.S. manufacturing base is “relatively limited” now, he said, and probably not capable of taking up the slack if the supply of modules from China were interrupted.

“These sorts of global trade disputes are ongoing across a lot of different markets, and they do have a lot of potential to destabilize the downstream growth that we’ve been seeing,” Barker said. “So they could have a dramatic effect on U.S. growth.”

Maybe for that reason, the chief executive of the Solar Energy Industries Association, a trade group, said trade litigation is a “blunt instrument and, alone, incapable of resolving the complex competitiveness issues that exist between the U.S. and Chinese solar industries,” according to The New York Times. Rhone Resch called for renewed negotiations to settle the dispute.