Tariff War To Impact US Solar Industry Supply Chain

As the global economy spirals with the tariff war unleashed by US President Donald Trump, the US solar power industry will feel the heat with an increase in prices, especially since the US’s own vertically integrated solar production doesn’t have the economies of scale.  

It depends on Southeast Asian nations for almost 80% of its PV supply. The impact on the US solar industry shouldn’t be immediate, though, since suppliers have stockpiled their warehouses in anticipation of the upcoming tariffs.

Industry experts believe that once this inventory is depleted, the market can expect price increases. Prices for solar modules in the US have been much higher than in the rest of the world for quite some time due to different protectionist measures, although they have been decreasing as well. However, Anza Renewables, a US solar & storage data analytics platform, believes that the new universal and reciprocal tariffs are likely a ‘turning point’ for solar module and battery energy storage system (BESS) pricing.

Under the US government’s International Emergency Economic Powers Act of 1977 (IEEPA), all Chinese imports will be subjected to a 54% tariff.

“Chinese materials, with the 54% IEEPA tariff rate coupled with Section 201 & 301 tariffs, are the hardest hit,” explained Anza. “Other Southeast Asian countries such as Cambodia, Malaysia, Thailand, and Vietnam, that are already subject to AD/CVD rates also are highly affected by the reciprocal tariffs, with rates from 24% to 49%.”

Anza analysts see it likely that Chinese and Southeast Asian manufacturers will attempt to shift their production to countries with lower tariff rates.

For solar, the US has already imposed Section 201 tariffs of 14% on imported bifacial solar modules with an expiration date of February 7, 2026. Under Section 301, a 50% tariff is imposed on solar cells (whether or not assembled into modules) imported to the US from China. Chinese solar wafers and polysilicon are subject to 50% US tariffs too (see US Raises Section 301 Tariffs On Chinese Polysilicon, Brings In Wafers Too). 

The US is also set to raise the Section 301 tariff on Chinese energy storage systems (ESS) and natural graphite from 7.5% to 25% in 2026, points out Anza. In addition, there is an antidumping and countervailing duties (AD/CVD) case on solar cells from Southeast Asia. Final determinations are expected on April 18, 2025 (see US Issues Solar Import Tariff Round 2 For Southeast Asian Nations).

While the analysts at BMI, a Fitch Solutions company, foresee a limited decrease in solar imports from Asia to the US, since this region already experiences high tariffs, they believe the final tariff rates in the AD/CVD case on April 18, 2025 hold the key. If implemented, these tariffs could raise the price of Chinese panels by 10 to 15 cents/W and ‘almost completely eliminate their price competitiveness.’

Although SEIA announced in Feb. 2025 that the US had reached 50 GW of module capacity, irrespective, says BMI, the country will continue to remain heavily reliant on solar cell imports as it hardly has any of its own; even though the numbers have been going up – most recently, in February 2025, ES Foundry started a 3 GW line in California. Even though the country has over 50 GW of cell production capacity plans announced, only 2 GW is operational, according to the SEIA. For wafers, announcements have been made for 24 GW, but nothing is online as yet. And coupled with the continued uncertainty regarding the Inflation Reduction Act (IRA) funding under Trump, solar manufacturing costs will head north and Chinese production will rather move to countries with lower tariffs. At least, Trina sold its new US factory when Trump came into power (see Amid ‘Geopolitical Risks’ Trinasolar Sells Off 5 GW US Solar Module Plant). 

However, others have been continuing so far, such as Canadian Solar, which operates a 5 GW solar module manufacturing plant in Texas, and plans to bring its 5 GW Indiana solar cell factory online by the end of 2025 (see 5 GW New Solar Module Production Capacity In US). And several international companies are still considering setting up manufacturing in the US, although this will also depend on the future of solar support or actions against solar from the Trump administration. 

Analysts at ROTH agree, as they point out that projects that still don’t have modules, trackers and/or inverters in the US right now may be at risk for being halted. This could impact their near-term revenues. Residential demand may slow down as system prices may go up 10 to 15 cents/W, while project/module costs move up by around 10% on average, according to a ROTH survey.

Referring to solar module supply from Southeast Asia, ROTH’s Managing Director and Senior Research Analyst Philip Shen said, “Our checks suggest pricing from lower-Tier 1s has already moved from 21.5c/W to 25.5c/W since the reciprocal tariffs were announced. From an inventory standpoint, our contact suggested vendor inventory appears limited, but there may be 20+ GW of modules on customer balance sheets.” 

Anza analysts recommend that the lowest risk option for solar equipment buyers is to purchase domestically produced cells or cells from countries with lower tariff rates, like Turkey or India, and even Indonesia since the Southeast Asian nation is exempt from Section 201 tariffs. 

Nonetheless, BMI points out that US consumers will likely have ‘to absorb solar panel price increases in the short to medium term.’ This will slow down the pace of installations in the country. For developers, the costs will definitely increase as they will need to pay higher prices for imported materials and components, leading to higher project costs and potential delays. 

Tariff war with China 

Meanwhile, the US and China continue to engage in the tariff war out front. 

On April 5, 2025, the US government imposed a 10% baseline tariff on imports from all US trade partners, calling these reciprocal tariffs, with discounted tariffs on its largest trading partners ranging from 10% to 49%. Even as several countries express the willingness to engage in bilateral trade negotiations, China chose to hit back.  

Starting from April 10, 2025, China has imposed a 34% tariff on imported goods originating from the US based on the earlier applicable tariff rate. In response, President Trump threatened to impose 50% additional tariffs on Chinese imports effective April 9, 2025. He delivered on the promise with Chinese goods now only able to enter the US with a 104% tariff. So far, China refuses to back down.

The Chinese Ministry of Foreign Affairs (FMPRC) termed it economic bullying by the US, which will ‘ultimately backfire.’ “There are no winners in trade or tariff wars. Protectionism is a dead end,” stated FMPRC.

China’s state news agency Xinhua quoted the Chinese Ministry of Commerce spokesperson as saying that the US should cancel all unilateral tariff measures against China, stop its economic and trade suppression, and settle all differences through equal-footed dialogue on the basis of mutual respect.

Nonetheless, Christian Roselund, the Senior Policy Analyst at Clean Energy Associates, believes that the solar industry has been through worse than the tariffs. He points to the impacts of the Uyghur Forced Labor Prevention Act (UFLPA), which has led to up to $3 billion in solar being detained. More than 80% of it has been proven to have no link to Xinjiang. 

Since module prices are only 1/4th of the system costs for utility-scale solar, solar is still the cheapest power. In a LinkedIn post, Roselund added, “And don't get me wrong - the *cumulative* effects of the Trump Administration's erratic trade policies and the Republican Party's threat to gut the ITC/PTC are definitely problems for the US energy transition. But this process is far more resilient than many casual observers realize.” Time will tell.