As solar energy adoption continues to rise, trade policies are playing a critical role in shaping the industry’s future. Recent developments, including increased tariffs on imports and shifting regulatory frameworks, have created a volatile landscape for manufacturers and developers alike. Understanding these policies and adapting supply chain strategies accordingly is essential for long-term stability and growth.
A Timeline of Key Trade Policy Changes
The current wave of tariffs impacting the solar industry can be traced to several pivotal decisions. The tariffs under Section 201 greatly affect the solar industry.
- In 2012, the Obama administration imposed tariffs on Chinese solar manufacturers under anti-dumping and countervailing duty (AD/CVD) laws.
- In 2018, President Trump approved recommendations to provide relief to U.S. manufacturers and imposed safeguard tariffs on imported CSPV (Crystalline Silicon Photovoltaic Cells) solar cells and modules. This excluded bifacial solar panels (solar panels that absorb light and generate electricity on each side of the panel).
- In Tariffs under Section 301, President Trump imposed tariffs of 25% on solar and other Chinese imports, and President Biden kept these in place.
- On February 4th, 2022, President Biden extended Section 201 tariffs for another four years, which included an exemption for bifacial solar panels.
However, with the return of Trump-era trade policies, additional tariffs have been introduced:
- On February 1st, 2025, a 10% tariff on Chinese solar imports went into effect, bringing the total duties on Chinese solar polysilicon, wafers, and cells to 60% under Section 301.
- As of this week, the U.S. introduced 25% tariffs on solar components from Canada and Mexico, adding to the uncertainty for North American suppliers. But has since pulled back on these promised tariffs.
This back-and-forth escalation between trade partners underscores the instability facing the solar sector.
The “Whack-a-Mole” Problem in Southeast Asia
With tariffs discouraging direct imports from China, many companies have turned to Southeast Asian nations like Cambodia, Thailand, Malaysia, and Vietnam. However, U.S. authorities have begun investigating whether these countries are being used as intermediaries for Chinese products, leading to stricter enforcement and further uncertainty.
As loopholes close, companies are now exploring alternatives, including sourcing from India, and Ethiopia, and increasing U.S. production. However, rapid policy shifts make it difficult for businesses to rely on any single strategy.
Short-Term Effects: Rising Prices and Market Disruptions
While innovation has decreased the costs of solar energy, tariffs have made solar in the United States more expensive than it would have been otherwise. The immediate impact of these tariffs is clear: higher costs across the board. As domestic suppliers become the primary alternative, their prices are also rising due to increased demand and manufacturing constraints.
We heard from industry experts at the 2025 Intersolar Conference, in San Diego on February 25th. They emphasized that domestic sourcing will not necessarily save money, as supply chain bottlenecks and material shortages drive prices up. Additionally, the tariffs alone will cause the US demand for solar energy to decline. Less solar in the electricity system could translate to more electricity produced by fossil fuels, and thus higher emissions.
Furthermore, expectations of future tariffs on energy storage and solar technology add another layer of uncertainty, making it difficult for companies to plan long-term investments.
The US has taken aggressive actions to diminish the role of Chinese producers in solar supply chains. Under the Trump administration, the costs of solar modules have already increased by 30%. US climate goals are premised on the strategy of making solar and other clean energy technologies cheap. Unfortunately, more expensive solar makes those targets more difficult to achieve. These costs may be justified by the benefits of punishing alleged trade violations, reducing dependence on China, or building more resilient supply chains. However, these are important trade-offs for policymakers to consider.
Solar PV manufacturing capacity according to announced projects and in the Net Zero Scenario, 2015-2030
Last updated: February 3, 2025
Building on the previous discussion of U.S. tariff and policy shifts, the following graph from the International Energy Agency illustrates how these dynamics are shaping global solar PV manufacturing. While investment announcements and new policies, particularly in the United States, aim to boost capacity to nearly 1000 GW by 2030, the data suggests that China will likely retain its dominant position, holding 80-90% of the market share despite diversification efforts. This underscores the complexity of reshaping global supply chains and the strategic considerations countries face as they scale up their clean energy ambitions.
Strategic Advice for Companies
Despite these challenges, industry leaders from the Intersolar Conference offer clear recommendations for navigating the shifting trade landscape:
- Diversify Your Supply Chain – Over-reliance on a single country or region is an extreme risk in the current geopolitical landscape.
- Partner with U.S. Manufacturers – As tariffs continue to favor domestic production, working with American suppliers can help stabilize costs and ensure compliance with trade policies.
- Act Now, Not Later – Waiting for certainty in trade policy is not a viable strategy. With rapid changes in regulations, companies must take proactive steps to safeguard their supply chains.
- Avoid Over-dependence on Southeast Asia – As investigations increase, the viability of these markets as alternative suppliers is declining. Investing in domestic production may be a more sustainable long-term solution, despite higher initial costs.
The solar industry is at a crossroads, balancing growth and affordability amid an unpredictable trade environment. By staying informed and adjusting your strategies accordingly, you can better position your company for success. While challenges remain, proactive decision-making and investment in diversified supply chains will be key to thriving in this evolving market.
Sources:
https://apnews.com/article/china-congress-tariffs-trump-967edbb35667963f0daeb949ee5c863c
https://www.energysage.com/news/how-new-trump-tariffs-could-affect-the-solar-industry/
https://my-ibisworld-com.ezproxy.csusm.edu/us/en/industry/33441c/products-and-markets
https://abcnews.go.com/Business/timeline-trump-tariffs-canada-mexico-china/story?id=119506883
China tariffs: https://www.pv-magazine.com/2025/02/05/us-government-raises-solar-polysilicon-wafer-and-cell-tariffs-from-china-to-60/
https://www.energypolicy.columbia.edu/qa-solar-tariffs-and-the-us-energy-transition/
Section 201 from the government: https://www.govinfo.gov/content/pkg/FR-2022-02-09/pdf/2022-02906.pdf
https://www.bbc.com/news/articles/c4gmjmymg0no
