Brinser said for an industry that has seen 50 percent drop in panel prices over the past year, the preliminary ruling is just part of the remedy. And his company feels that between now and later this year when a final determination is made, Chinese panels will be taxed at an even higher rate. By then we’ll start to see a “rebuilding of American solar manufacturing.” And it’s when, he said, the market will emerge as free of intervention, and with a renewed focus on innovation that will be stimulated by the growing manufacturing base.

But many of the leading Chinese manufacturers are adamant that they haven’t been dumping their products and they are publicly confident that the final numbers will in fact be lower than what we saw Thursday.

For an industry desperately seeking clarity, the notion that the issue is not really resolved underscores the bitter divide that’s been drawn and the enormous scale of what’s at stake.

The preliminary rulings for both the lower countervailing duties (CVD) and the much steeper anti-dumping duties will go through further Department of Commerce (DOC) scrutiny, and Chinese manufacturers are sure to make the case that the numbers are higher than they ought to be, while SolarWorld will argue they are still too low. The rate at which tariffs are initially set often differs from the final determination, so there is still a lot of push and pull to be had.

According to Vishal Shah of Deutsche Bank, this process is currently unfolding for the CVD case with the DOC investigating glass subsidies and potentially excessive rebates of value added tax.

The issue has dominated the solar landscape from American rooftops to Chinese production lines. And it’s been watched intently across boardrooms in Europe and even in growing markets like India, whose domestic solar manufacturers are also having trouble competing on price in an industry increasingly dominated by China.

Thursday’s ruling and reaction indicate how Chinese and domestic companies alike view the lucrative American solar market. The U.S. installed just shy of 2 gigawatts of solar in 2011 and barring a repeal of the Investment Tax Credit (ITC), most analysts see significant growth ahead — even without the recently expired 1603 grant. The basis for much of this growth — past, present and certainly future — has been low-cost Chinese panels that have dominated the market at the expense of American producers.

For Trina Solar, the world’s fourth largest supplier of PV modules, the American market is labeled as “strategic,” meaning it expects it to sustain itself without the need for subsidies within the next three to five years.

“Our investment in the U.S. won’t get smaller,” said Mike Grunow, Trina’s Marketing Director for the Americas. “We’ll be here in a major way and we’re very bullish on this market.”

In Search of Winners

A day after the announcement, the industry is grappling with a new reality. What will change because of these tariffs. Will America become a manufacturing leader because of this? How will these changes impact price and installation? And how will China respond?

Tony Clifford, CEO of developer and EPC contractor Standard Solar, isn’t so sure higher prices will do anything to significantly help American panel manufacturers. There will be winners, he said. But they’re just as likely to be panel makers based in Japan, Korea and other countries where large-scale operations are starting to thrive.

“Chinese companies are not the only foreign manufacturers shipping cells and modules to the United States,” he said. “I'm sure that solar manufacturers in other Asian and European countries will be able to profitably offer solar modules in the U. S. market at prices well within the ‘cost-plus-31-percent-tax’ that will be applied to Chinese modules.”

He also noted that the industry has a real deadline hanging over its head, and that’s the time left before the federal ITC expires at the end of 2016. He fears the trade dispute has distracted the industry from its collective objective — to become cost-competitive without subsidies in key markets within the next four and a half years.

“If we don't, it will not matter who wins or loses a trade war in 2012,” he said.

Brinser said SolarWorld should benefit from the new tariff and that prices industrywide will likely go up, but that ultimately the free market will decide on pricing. He admits that while the intent was to eliminate practices that harm American manufacturers, companies outside the U.S. are just as likely to benefit from the ruling and fill the capacity gap.

What Happens Next?

Analyst Jesse Pichel of Jeffries expected that a ruling of at least 15 percent would have pushed Chinese manufacturers to shift production to a third party country. That the tariff is currently twice as high only makes such a move that much more financially appealing. As the ruling reads, cells imported into China and turned into modules will not be subject to the tariff. The likely beneficiary would be Taiwan, though Pichel warned the new demand itself may increase the pricing of cells coming out of that country.

Grunow said Trina, which because of its size has a well-established global supply chain, is prepared to “comply with the ruling and get the best price for our customers.”

Chinese companies may also choose to set up manufacturing operations close to the American market. Jinko Solar and Canadian Solar have facilities north of the border and Suntech has a facility in Arizona. Mexico, meanwhile, could be a possibility for Chinese companies looking to build operations capable of serving the North American market.

However, the New York Times cited an anonymous Chinese banker as saying such a shift in production won’t be so easy. The source told the paper that state-owned banks are reluctant to continue the heavy lending that has spurred an industry-wide overcapacity. 

Brinser noted that his company will work with federal officials to ensure that any method Chinese companies use to avoid the tariffs be through legal means. “We’ll be monitoring it pretty closely,” he said.

The Political Fallout

Politics have always been at the center of this debate. Even before SolarWorld officially filed the complaint, its hometown senator, Ron Wyden, a Democrat, wrote a letter to President Obama urging legal action aimed at China’s solar policy. Obama himself, shortly after the investigation launched, condemned China’s trading practices and began laying the groundwork for a new election year push to bring solar manufacturing jobs back to America.

Sen. Sherrod Brown, D-Ohio, has long been a vocal advocate of the need for America’s solar industry to be supplied predominantly by American-made products. He and colleague Sen. Charles Schumer, D-N.Y., this week introduced legislation that would exclude Chinese solar panels that do not meet a domestic requirement from qualifying for the 30 percent ITC. Chances are the measure won’t go far, but it does serve to heighten the rhetoric that continues to heat up between Beijing and Washington.

According to China Daily, the nation’s Ministry of Commerce called the ruling “trade protectionism” and “unjustified.” MOC spokesman Shen Danyang also alleges that U.S. officials disregarded evidence supplied by the Chinese companies that would have impacted the dumping margins.

“The big question now is how the Chinese will respond,” said Chris Brown, an analyst with Asia Cleantech Gateway. “I expect to see increased tariffs on U.S. polysilicon [going into China].”

Pichel agrees, saying such a move may disrupt global pricing. And the ruling could broaden the dispute to include Europe. Reports earlier this year indicated that SolarWorld in Germany was working to drum up industry support for a European Union-based trade investigation.

But so far, no trade complaint has been filed as the global solar industry watches to see how the U.S.-China dispute unfolds.

Lead image: Tug of War via Shutterstock