The preliminary decision by the U.S. Commerce Dept. to impose tariffs of 30% or more on imports of solar cells and panels from China could have a chilling effect on the industry, various sources say.

“It will put a drag on the industry as a whole,” says Robert Healy, manager of Kansas City, Mo.-based Burns & McDonnell’s renewable-energy group.

The Commerce Dept. announced on May 17 that it would impose tariffs of 30% or more on crystalline-silicon photovoltaic cells and panels from China after concluding that China had “dumped” the materials into the U.S. market well below market value. The dumping has been cited as one of the reasons Silicon Valley solar manufacturer Solyndra closed its doors and filed for bankruptcy in 2011.

In October 2011, Hillsboro, Ore.-based Solar World Industries America Inc., with the support of six other American solar manufacturers, filed anti-dumping and countervailing-duty petitions with Commerce and the International Trade Commission. The petitions alleged that Chinese manufacturers were illegally dumping solar cells and panels in the U.S. market and receiving billions in illegal World Trade Organization subsidies. The Commerce Dept. issued a preliminary decision on the countervailing-duty petition in March 2012.

Gordon Brinser, president of SolarWorld, said in a statement that he was pleased with the determination. “Commerce’s careful measures could help thwart China’s illegal drive to control the solar market and supplant manufacturers and jobs in America, the very country that invented, pioneered and innovated solar to today’s mainstream viability.”

While SolarWorld and other solar manufacturers praised the decision, some industry observers believe the market for solar projects in the U.S. will suffer.

The move likely will result in higher costs for solar panels in the U.S., Healy says. As a result, owners of projects currently under development will need to review the costs of their plans to make sure “that those projects are still going to make sense.”  He adds, “From our perspective, if projects are no longer economical, that means we're not doing any A/E work for them.”

Paul Nathanson, executive director of the Consuming Industries Trade Action Coalition, concurs. “Commerce has not considered this impact in setting the duties despite the fact that these new duties are likely to hurt U.S. suppliers of equipment and capital for solar projects, as well as project developers and installers, by making solar energy cost more and be less competitive in the U.S. market than other forms of energy,” he says.

The Commerce Dept. is expected to complete its investigation and make a final determination by October 2012.