(Dec 21): The Biden administration is mulling exempting Mexico from tariffs on imported solar equipment, a last-minute change that would primarily benefit Maxeon Solar Technologies Ltd. 

The exemption being weighed by senior officials in the waning weeks of Joe Biden’s presidency was described by people familiar with the matter, who asked not to be named because no final decision has been made. It comes amid broader trade policy discussions involving Mexico, as well as longstanding administration struggles to nurture domestic clean energy manufacturing without chilling solar power deployment that has for years relied on cheap foreign-made equipment. 

At issue are tariffs on imported crystalline silicon solar cells and modules that were imposed by then US president and now President-elect Donald Trump in early 2018 and extended by Biden through Feb 6, 2026, with the level set to be 14% for most of next year. While the US waived Canadian products two years ago, it stopped short of also exempting Mexico, having concluded domestic solar manufacturers stand to be seriously harmed by the country’s exports. 

The change now under consideration would effectively reverse that view, potentially increasing the flow of solar imports into the US — and giving an advantage to Maxeon, Mexico’s dominant module supplier. The company, majority-owned by China’s TCL Zhonghuan Renewable Energy Technology Co Ltd., can produce 2.5 gigawatts (GW) of modules annually at its factories in Mexico, about 93% of the country’s total capacity, according to BloombergNEF data.

Opponents of the possible exemption, including advocates of domestic manufacturers, say the change would put those US producers at an unfair disadvantage to a foreign, Chinese-backed rival. Representatives of the White House, the US Trade Representative and Maxeon did not respond to requests for comment. 

A tariff exemption could give Maxeon’s Mexico-made panels an advantage in the US. Still it wouldn’t resolve other challenges confronting the company, including a sluggish US solar market. The Singapore-based company in September warned that US imports from its Mexico factories had been impounded at the border, while customs officials assess their compliance with trade curbs meant to discourage alleged human rights abuses in China. In November, the company announced a broad restructuring, shifting to focus exclusively on the US market and selling off other operations. 

Maxeon has said it intends to build a module assembly plant in Albuquerque, New Mexico, though plans have been scaled back from the 3GW capacity first announced in August 2023. The company now says it expects to begin manufacturing in a 2GW facility there in early 2026, a year later than initially envisioned. The project has been cheered by New Mexico Democrats, including Senator Martin Heinrich, set to be the top Democrat on the chamber’s Energy and Natural Resources Committee next year.

It’s also unclear whether any tariff exemption for Mexican-made solar equipment would last. President-elect Donald Trump has vowed to go in the opposite direction, threatening 25% tariffs on Canada and Mexico, in a bid to clamp down on illegal immigration and fentanyl trafficking. 

Separately, the office of the US Trade Representative has been fielding requests from some domestic solar module manufacturers to raise an annual quota on cells that can be imported without being hit by the tariffs. The annual 12.5GW cap will reset in early February, but US imports are on track to surpass that threshold beforehand. 

Some module manufacturers reliant on imported components have lobbied the administration for an increase in that duty-free quota next year. Without a boost, they say, the tariffs will penalise US panel makers reliant on foreign supplies, while the country builds out its domestic cell production capacity. 

Uploaded by Liza Shireen Koshy