Biden Mulls Tariff Break for Solar Modules From Mexico

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(Bloomberg) — The Biden administration is considering exempting Mexico from tariffs on imported solar equipment, a last-minute change that would primarily benefit Maxeon Solar Technologies Ltd.

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The exemption, which was being considered by senior officials in the final weeks of Joe Biden’s presidency, was described by people familiar with the matter who asked to remain anonymous because a final decision has not yet been made. It comes amid broader trade policy debates involving Mexico as well as the administration’s long-running struggle to boost domestic clean energy manufacturing without spreading horrific solar power that has relied for years on cheap foreign equipment.

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The debate is over tariffs on imported crystalline silicon solar cells and modules imposed by President-elect Donald Trump in early 2018 and extended by Biden through February 6, 2026, and the level is set to reach 14% for most of next year. While the United States waived Canadian products two years ago, it stopped short of waiving Mexico as well, after concluding that domestic solar manufacturers would be severely hurt by the country’s exports.

The change now under consideration would effectively reverse that view, potentially increasing the flow of solar imports into the United States — and giving an advantage to Maxion, the dominant supplier of modules in Mexico. The company, which is majority owned by TCL Zhonghuan Renewable Energy Technology Co. Ltd. China, producing 2.5 gigawatts of units annually at its plants in Mexico, about 93% of the country’s total capacity, according to BloombergNEF data.

Opponents of the potential exemption, including advocates for domestic manufacturers, say the change would put these American producers at an unfair disadvantage to a foreign competitor backed by China. Representatives for the White House, US Trade Representative and Maxion did not respond to requests for comment.

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The tariff exemption could give Maxion panels made in Mexico an advantage in the United States. However, it will not solve other challenges facing the company, including the stagnant solar market in the United States. The Singapore-based company warned last September that US imports from its factories in Mexico had been detained at the border while customs officials assessed their compliance with trade restrictions aimed at discouraging alleged human rights abuses in China. In November, the company announced a large-scale restructuring, shifting to focus exclusively on the US market and selling other operations.

Maxeon said it intends to build a module assembly plant in Albuquerque, New Mexico, though plans will be scaled back from the 3 gigawatt capacity first announced in August 2023. The company now says it expects to begin manufacturing at a 2 gigawatt facility. There in early 2026, a year later than initially envisioned. The project has been welcomed by New Mexico Democrats, including Sen. Martin Heinrich, who is set to be the top Democrat on the House Energy and Natural Resources Committee next year.

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It is also unclear whether any tariff exemption for Mexican solar equipment will continue. President-elect Donald Trump has vowed to go in the opposite direction, threatening to impose 25% tariffs on Canada and Mexico in an effort to crack down on illegal immigration and fentanyl trafficking.

Separately, USTR has been receiving requests from some domestic solar module manufacturers to increase the annual quota on cells that can be imported without being subject to tariffs. The annual cap of 12.5 gigawatts is scheduled to be reset in early February, but U.S. imports are on track to exceed that limit already.

Some unit manufacturers that rely on imported components have lobbied the administration to increase that duty-free quota next year. Without a push, they say, the tariffs will punish U.S. panel makers who rely on foreign supplies while the country builds its domestic cell production capacity.

-With assistance from Jenny Leonard, Eric Martin, Sing Yi Ong, and Will Wade.

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