Brazil Reinstates 12% Import Tariff on Photovoltaic Components!

On December 12, the Brazilian government approved measures to increase import tariffs on photovoltaic components and wind turbines, citing the promotion of local renewable energy equipment production. The measures are set to take effect on January 1, 2024.

According to the Brazilian Ministry of Industry and Trade, the government has rescinded the 12% import tax subsidy on photovoltaic components, as the country is also a producer of similar products. Simultaneously, the Brazilian government has revoked over 300 temporary tax reduction measures on solar components, set to be effective within 60 days.

Prior to this decision, the majority of Brazil's photovoltaic components were imported from China. In the period from January to October 2023, China exported photovoltaic components worth $3.164 billion to Brazil, ranking as the second-largest exporter of such components to the country.

Analysts suggest that China's exports to the Netherlands may not accurately reflect the country's photovoltaic installations, attributing the high trade volume to the Netherlands' robust re-export potential. Excluding re-export potential and the impact of Chinese companies' Southeast Asian production capacity on exports to the United States, Brazil emerges as the top destination for Chinese photovoltaic product exports.

Brazil is one of the countries in the global top ten for photovoltaic installations, starting later but experiencing one of the fastest growth rates. In 2022, Brazil's solar power capacity reached 24 GW, ranking eighth globally. As of October 2023, the estimated total solar power capacity in Brazil is around 34.2 GW, with an impressive addition of 10 GW in the first ten months of the current year, surpassing the total for the entire previous year.

Looking back at the industry's history, Brazil had imposed a hefty 12% tariff on imported solar components and a 14% tariff on inverters. However, on August 1, 2020, the Brazilian government eliminated all import tariffs on foreign-manufactured solar photovoltaic equipment, reducing the import tax rate to 0%.

In 2022, China's total exports of photovoltaic products to Brazil amounted to $4.8 billion, with inverters contributing $800 million. Considering last year's export figures, Chinese companies are now facing an additional $688 million, equivalent to about ¥4.2 billion, in tariff costs due to the reinstated import tariffs.

From January to October 2023, China's exports to Brazil included components and batteries worth $3.164 billion (with batteries accounting for only $3.9 million), while silicon wafers saw zero exports, and inverters amounted to $436 million. Export figures for components and inverters declined by 26% and 35%, respectively. In terms of export volume, China's exports of photovoltaic components and inverters to Brazil saw a 12% and 33% decrease, respectively, when counted by quantity.

This recent decision by the Brazilian government to raise import tariffs on photovoltaic components is expected to have a significant impact on the export and development of Chinese photovoltaic component and inverter enterprises.

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