Risk of Retroactive Solar Panel Duties Looms in Court of International Trade Case

Auxin Solar (Auxin) is asking the US Court of International Trade (CIT) to overturn a moratorium that allowed certain solar panels and modules from Southeast Asia to enter the US duty-free between June 2022 and June 2024 (the Moratorium Period). Auxin is asking the CIT to reliquidate all entries during the Moratorium Period—a result that has the potential to impose steep antidumping (AD) and countervailing duties (CV), retroactively, on some panels and modules. Alternatively, Auxin is asking the CIT to assess AD/CV duties and reliquidate all entries that benefited from duty-free treatment that were imported prior to the Moratorium Period. Under either scenario, the economic impact of retroactive duties could be substantial. Between 2022 and 2023 alone, an estimated US$21 billion in applicable solar cells and modules were imported into the United States from Southeast Asia. In the first half of 2024, the value of the impacted products exceeded US$7 billion. 

As the firm wrote about here, there are several contract clauses that might address the risk associated with changes to project economics arising from shifts in US trade policy or changes in law. In addition, some parties may have specifically allocated for the scenario of increased duties associated with the Auxin litigation and a related Department of Commerce (Commerce) investigation into alleged circumvention of antidumping orders. Parties that imported any of the products at issue should consult their contracts to determine whether they address the potentially significant economic impact of a reliquidation order by the CIT. 

Case Background and Status

In 2012, Commerce issued AD and CV orders (together, the 2012 Orders) covering crystalline silicon photovoltaic cells (CSPVs), whether or not assembled into modules (solar cells and modules), from the People’s Republic of China (China).¹ On 1 April 2022, Commerce initiated inquiries to determine whether imports of solar cells and modules produced in Cambodia, Malaysia, Thailand, and Vietnam (the Southeast Asian countries) circumvented the 2012 Orders by incorporating parts and components from China.² 

On 6 June 2022, President Biden issued Proclamation 10414, which found that: (1) “[a] robust and reliable electric power system is … not only a basic human necessity, but is also critical to national security and national defense,” (2) there is an “acute shortage of solar modules and module components” in the “solar supply chain,” and (3) “[i]mmediate action is needed to ensure … access to a sufficient supply of solar modules to assist in meeting our electricity generation needs.” President Biden declared “an emergency to exist with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand.” Proclamation 10414 authorized Commerce “[t]o provide relief from the emergency” and directed that Commerce “shall consider taking appropriate action under” 19 U.S.C. § 1318(a) to permit the importation of certain solar cells and modules from the Southeast Asian countries, free of the collection of AD/CV duties, if otherwise applicable. President Biden directed that Commerce do so “under such regulations and under such conditions as the Secretary may prescribe” and that the duration of any such relief would be through “24 months after the date of this proclamation or until the emergency declared herein has terminated, whichever occurs first.”³

In July 2022, pursuant to Proclamation 10414, Commerce issued a proposed rule to provide relief from the emergency declared by President Biden. In September 2022, Commerce promulgated its final rule with an effective date of 15 November 2022 (Duty Suspension Rule). The Duty Suspension Rule required that Commerce instruct CBP to discontinue the suspension of liquidation and liquidate “Applicable Entries” of solar cells and modules free of duties that are covered by the circumvention inquiries (that initiated on 1 April 2022) and entered prior to the “Date of Termination” (that occurred on 6 June 2024).⁴ Commerce imposed a limitation that to qualify for duty-free treatment under the rule, the solar cells and modules must be “used in the United States by the Utilization Expiration Date” (180 days after the Date of Termination). Commerce explained that the waiver of “duties on the specified goods will provide relief to this emergency by encouraging imports and increasing solar energy capacity.”⁵  

In December 2022, Commerce issued preliminary determinations on the circumvention inquiry initiated in April 2022. Commerce’s preliminary finding held that certain imports of solar cells and modules from the Southeast Asian countries are circumventing the 2012 Orders.⁶ However, pursuant to the Duty Suspension Rule, Commerce directed CBP to discontinue the suspension of liquidation and collection of cash deposits that were ordered on Applicable Entries because of the circumvention inquiries.⁷ To qualify for duty-free treatment, Commerce also imposed certification requirements for imports of solar cells and modules from the Southeast Asian countries.⁸ In August 2023, Commerce published its final determinations that certain imports of solar cells and modules from the Southeast Asian countries are circumventing the 2012 Orders.⁹ Commerce continued to impose certification requirements for imports of solar cells and modules from the Southeast Asian countries to qualify for duty-free treatment. 

On 29 December 2023, Auxin commenced litigation in the CIT, challenging the Duty Suspension Rule. Auxin alleges that the Duty Suspension Rule exceeds Commerce’s authority, misinterprets the enabling statute, and allows for the duty-free importation of otherwise circumventing merchandise that does not qualify as being used for “emergency relief work,” as required by statute. Auxin seeks vacatur of the Duty Suspension Rule and reliquidation of all entries that entered the United States duty-free under the Duty Suspension Rule. Alternatively, Auxin asks that all circumventing entries that entered the United States prior to the date of the declared emergency or beginning of Moratorium Period be reliquidated and subject to AD/CV duties. 

Auxin filed a motion for judgment on the agency record on 22 July 2024. The CIT heard oral argument on Auxin’s motion on 26 June 2025, making the matter ripe for decision within the coming weeks or months.

Key Takeaways

If Auxin is granted its requested relief, CSPV solar cells and modules from Southeast Asia found to have circumvented the 2012 Orders regarding Chinese-made CSPV solar cells and panels could be subjected to reliquidation and assessed the previously suspended AD/CV duties. The economic implications would be substantial with importers of record potentially facing steep additional costs for entries previously categorized as duty-free. 

Parties to projects utilizing CSPV solar cells and modules from Southeast Asia that were imported under the Duty Suspension Rule, or prior to its enactment, should follow this matter closely to assess the likelihood that duties will be owed. In addition, parties should consult their contracts to determine who has responsibility for payment of such duties and whether any risk sharing or risk allocation was contemplated by the parties. In the default scenario, the importer of record is responsible for payment. However, parties, through change-in-law provisions, material-adverse-change provisions, price-adjustment clauses, force majeure clauses, and other cost-sharing mechanisms, may have agreed to alter such payment responsibility or provide for contractual relief or compensation for these additional costs in some other way. Importers should also be certain that they understand the regulations and certification requirements concerning a manufacturer, producer, seller, or exporter agreeing to pay or refund AD/CV duties.¹⁰ While Auxin’s success before the CIT is by no means assured, understanding each individual contract, the contours of prohibited arrangements, and the availability of risk mitigation or potential contractual renegotiation is recommended.