Biden to Pause New Solar Tariffs as White House Aims to Encourage Adoption

The Commerce Department had been considering whether to impose the tariffs as part of a trade case against Chinese companies.

By Ana Swanson June 6, 2022 Updated 9:51 a.m. ET WASHINGTON

The Biden administration on Monday is set to announce a two-year pause on imposing any new tariffs on the solar industry, following an outcry from importers who have complained the levies are threatening broader adoption of solar energy in the United States. The decision is a victory for domestic solar installers, who said the tariffs would put at risk the Biden administration's goal of significantly cutting carbon emissions by the end of the decade. But it will go against the wishes of American manufacturers and labor unions, which have been pushing the administration to erect tougher barriers on cheap imports to help revive the domestic solar industry. To counteract those complaints, the administration also plans to announce policies to help support the domestic solar industry, according to people familiar with the plans, who declined to speak publicly ahead of the White House's official announcement. Two people familiar with the discussions said those efforts would involve using the authorities of the Defense Production Act, which gives the president expanded powers and funding to direct the activities of private businesses. The Commerce Department had been considering whether to impose the tariffs as part of a trade case that accused Chinese solar companies of trying to get around existing levies by moving their operations out of China and into other countries. In recent years, major Chinese solar producers have set up large operations in Vietnam, Malaysia, Thailand and Cambodia. If the Commerce Department determined that the factories had been set up to circumvent U.S. tariffs, the administration could have retroactively imposed tariffs on their shipments to the United States. American solar companies have said that the prospect of more and retroactive tariffs was already having a chilling effect on imports. Groups such as the Solar Energy Industries Association have been lobbying the White House against the tariffs and on Monday welcomed news that the administration would pause any new levies. "Today's actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home," Abigail Ross Hopper, president and chief executive of the Solar Energy Industries Association, said in an emailed statement. "During the two-year tariff suspension window," she said, "the U.S. solar industry can return to rapid deployment while the Defense Production Act helps grow American solar manufacturing."

Given the article above, summarize in your words and explain what microeconomics principle the article demonstrate. Note: Do not reference supply and demand as your concept, because it does not differentiate between Macro and Micro.