China's renewable energy industry responded this week to a U.S. push to slap tariffs on cheap Chinese solar cells by conveying a simple message: Mess with us, brace for the worst.

"If there are no cheap Chinese solar panels in the market, many U.S. solar power developers will be forced to stop their plans," Cao Huabin, general manager of CECEP Solar Energy Technology, China's largest solar plant developer, told reporters.

It wasn't just talk for the cameras.

On Monday, CECEP announced that it would temporarily shelve $500 million of planned solar projects in California, New Jersey and Texas, in light of an Oct. 19 trade complaint from seven American solar firms. The companies allege that illegally subsidized Chinese firms are distorting the market with underpriced panels—and making it impossible for them to compete.

The case could lead to tariffs on soaring imports of Chinese solar goods. Last year, the U.S. imported $1.5 billion worth of solar panels from China—more than double the $640 million it brought in from China in 2009. 

Huabin said if tariffs forced CECEP to spend 30 percent more on panels his firm "would certainly drop" its U.S. solar plans because there would be "no profit to be made."

There are no signs yet the U.S. is buckling to the pressure.

The Commerce Department said Wednesday it would launch an investigation into the trade complaint. Next step is for the U.S. International Trade Commission to vote on Dec. 2 on whether the Commerce Department can proceed.

The Chinese Chamber of Commerce for Import and Export of Machinery and Electronic Products warned the ITC this week: "This ill-advised attack is threatening the whole industry in the United States," Bloomberg reported. 

The argument goes like this: Tariffs would make solar panels more expensive, which would make going solar costlier for American consumers. That, in turn, could slow the nation's demand for solar—just as China is catching up. (According to a report released Monday by Solarbuzz, a solar consulting group, China is on pace to match or even top the number of new solar panel installations in the U.S. this year for the first time.)

China isn't alone in its tariff opposition. On Tuesday, a group of American solar installers joined with U.S. subsidiaries of Chinese solar firms to launch the 25-member Coalition for Affordable Solar Energy, or CASE, to prevent new taxes.

The coalition argues that panel prices have dropped 30 percent since January 2010, and that cheap Chinese cells have become the lifeblood of the fastest-growing energy sector in the U.S. Tariffs would slow rapid solar expansion, they say, and could put the nation's 100,000 solar industry jobs at risk.

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