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WASHINGTON -- The Obama Administration moved Thursday to impose stiff new tariffs on solar panels made in China, finding that Chinese companies are improperly flooding the U.S. market with government-subsidized products.
The Commerce Department said Chinese producers had dumped solar cells and panels in the United States for less than it costs to manufacture and ship them. If the preliminary ruling is upheld, tariffs averaging 31 percent could be imposed on Chinese solar-panel imports. A final decision is expected in October.
The tariffs would be in addition to fees ranging from 2.9 percent to 4.73 percent imposed in March after the department found that China is improperly subsidizing its solar manufacturers.
The tariffs announced Thursday were higher than expected and could ratchet up trade tensions between the two countries.
Several U.S. solar panel makers, led by SolarWorld, had asked the government to penalize China for dumping low-price products on U.S. markets. The companies are struggling against fierce competition from China as well as weakening demand in Europe and other key markets.
A majority of U.S. solar panel installers oppose tariffs on Chinese panels, arguing that less expensive imports have helped make solar panels more affordable for U.S. customers.
The companies also worried that China could retaliate against U.S. companies, noting that Chinese authorities have announced their own probe into whether U.S. support for renewable energy companies hurts foreign suppliers.
"This is the first step to a trade war between the U.S. and China," said Jigar Shah, leader of a coalition of solar companies that oppose U.S. tariffs.
The Commerce Department decision will increase U.S. solar prices "precisely at the moment solar power is becoming competitive with fossil-fuel-generated electricity," said Mr. Shah, president of the Coalition for Affordable Solar Energy.
SolarWorld President Gordon Brinser said the Commerce Department had merely confirmed that Chinese manufacturers have illegally dumped solar cells and panels in the U.S. market, giving their products an unfair advantage.
The ruling "will re-establish a natural balance in pricing that does need to occur in the global marketplace," Mr. Brinser said, adding that the U.S. solar market has been distorted by cheap Chinese imports.
SolarWorld Industries America Inc., a subsidiary of Germany's SolarWorld AG, is the largest U.S. maker of silicon solar cells and panels.
The company was joined by six other manufacturers in filing the unfair trade complaint.
Mr. Shah and other critics say steep tariffs will lead to the loss of thousands of U.S. jobs, but SolarWorld's Mr. Brinser dismissed that as "doomsday" talk.
Solar power is growing rapidly in the United States, he said, adding that demand for solar panels will continue to rise as states set standards for renewable energy and consumers see benefits from solar power.
The United States and China are two of the world's biggest markets for solar, wind, and other renewable energy technology. Both governments are promoting their own suppliers in hopes of generating higher-paid technology jobs.