A new preliminary decision from the US Department of Commerce suggests that tariff rates on Chinese solar cells may be halved, after an investigation found that Chinese companies were not dumping products in the US at rates previously stated.

The International Trade Administration (ITA) of the Commerce Department said that a preliminary review of Chinese solar-panel tariffs from May 2012 to November 2013 showed that 29 Chinese companies are entitled to a new rate status. The current tariff rate of about 31 percent might drop to around 18 percent, the ITA said in its Jan 2 release.

The ITA also found in its investigation that several Chinese manufacturers - including Yingli Energy Company - were dumping at a margin of 1.82 percent, compared to the 238.56 percent assigned to the rest of the Chinese companies that were not mandatory respondents and had either failed to apply or unsuccessfully applied for a separate rate.

Commerce had said in its Dec 16 decision that Chinese companies were subsidized at a rate of 38.72 percent, and in newly-adjusted rates, lowered that to 15.68 percent.

"Assuming they're enacted as they're currently preliminarily proposed, then it will definitely be a positive for Chinese manufacturers," said Shayle Kann, senior vice-president of research at GTM Research.

This is "absolutely a setback for SolarWorld," Kann said, referring to the German-owned, US-based company that filed the original petition that accused Chinese manufacturers of receiving subsidies from the Chinese government, and dumping products into the US. SolarWorld said that Chinese companies were avoiding duties by taking production to Taiwan instead.

"I think this would have a very real impact, certainly for Chinese suppliers, because it solidifies the strategy that many of them have been employing of just selling an all-China product into the US and paying these 2012 tariffs," Kann said.

"It makes them able to sell them with higher margins at more competitive pricing, and it erodes SolarWorld's string of successes that they've had in these cases. It's not going to make or break the US solar market, but certainly for the companies selling modules into the market, this will have a real impact."

Jigar Shah, president of the Coalition for Affordable Solar Energy, said that the proposed lower tariff rates are a "step in the right direction for the US solar industry" because it means that American customers will be able to afford solar power.

"While this is positive news, it does not solve the underlying problem. The US solar industry remains unfairly penalized by a trade policy that inflates the cost of solar power and has already expanded to include imports from Taiwan," he said in a Jan 5 release.

"We continue to urge the governments of the United States and China to negotiate an end to the trade war for the benefit of all countries involved."

Philip Shen, senior research analyst at Roth Capital Partners, said that the potentially lower tariff rate represents a "substantial potential improvement to US margins of module vendors".

He said that the potential tariff change could provide a "meaningful improvement for the economic outlook of the US market. While the 2014 trade case, in our view, is not immediately relevant, companies are actively shipping under the 2012 tariff regime." Lowering the 2012 tariffs could be an improvement to US margins, Shen added.

A final decision is due from the International Trade Commission at the end of January.

amyhe@chinadailyusa.com