The United States’ preliminary decision to impose anti-dumping tariffs of up to 271 percent on solar products from four Southeast Asian countries could significantly drive up procurement costs for US companies and squeeze profit margins for downstream businesses, analysts warned on Monday.
The tariffs, which affect solar panels and components produced in Southeast Asia, are expected to have a ripple effect on the region’s production and exports, with many leading Chinese solar companies that had previously set up factories in these countries now actively seeking alternative production sites. However, experts suggest that the Southeast Asian market may still hold potential for the export of silicon wafers and cells to the US, given the difficulty the US faces in rapidly setting up domestic production facilities. Still, the export of complete solar modules could be severely restricted under the new tariffs.
A report from Eastmoney Securities indicates that the competitive advantage of the four Southeast Asian nations in exporting solar products to the US will be significantly weakened, potentially eliminating their ability to export certain products to the country entirely. The report also highlighted that the US Inflation Reduction Act (IRA), which provides subsidies to support the growth of domestic solar production, is expected to rapidly boost the country’s manufacturing capacity for solar components.
Several major Chinese solar manufacturers, such as JA Solar and Jinko Solar, have already begun constructing factories in the US to circumvent the tariffs, further signaling a shift in production strategies. However, despite these efforts, experts noted that the US still faces challenges in scaling up its production of crucial solar components, particularly silicon wafers and cells.
Tan Youru, a solar analyst at BloombergNEF, commented, “While the US has established some module packaging capacity locally through the IRA, most US-manufactured crystalline silicon solar modules still rely on imported cells. Despite substantial subsidies to attract upstream solar manufacturing, few well-known companies are planning to produce silicon wafers and cells in the US.”
Lin Boqiang, the head of the China Institute for Studies in Energy Policy at Xiamen University, pointed out that while manufacturing solar modules can be quickly scaled up through investment, producing silicon wafers and cells requires complex technological inputs, making rapid expansion more challenging.
In response to the US trade investigation, China’s Ministry of Commerce expressed concerns over the politicization of trade remedy measures, suggesting that the investigation’s outcomes might be preordained. The ministry has raised alarm over the US tendency to use trade remedy investigations as political tools rather than purely economic measures.
Sun Lei, a senior partner at DENTONS, a global law firm specializing in trade remedies, noted that while the US continues to pursue renewable energy goals and boost solar installations, it will still need to import solar equipment. The tariffs will likely result in higher procurement costs domestically, which could either eat into profit margins for purchasers or lead to price increases passed down the supply chain.
As the US looks to strengthen its domestic solar supply chain through the Inflation Reduction Act, the broader impact of these tariffs will depend on how quickly local production capacity can ramp up and whether manufacturers can find alternative export markets or shift production strategies.