Gloomy Days For Global Solar Power

Forbes

5 days ago

The tariffs announced by the Trump Administration at the beginning of April have cast a shadow across international energy supply chains. The new policies were delayed for ninety days less than a week later, and the much-feared shortages and price hikes haven't yet materialized. Nevertheless, the mood in the industry remains pessimistic.
In May, the U.S. Department of Commerce announced that companies based in Cambodia, Malaysia, Thailand, and Vietnam are dumping solar panel cells at low rates into the U.S. market while receiving subsidies from the Chinese government, setting the stage for the imposition of tariffs on all parties involved.
The paradox is that, for years, the United States encouraged the transfer of industrial production from China to these Southeast Asian countries. The rationalization was that while 'friendshoring' would still partially enrich China, it would decrease China's profit share while empowering neighbors with contentious relations to Beijing and friendlier attitudes towards Washington. Now, the Trump administration and the solar power industry must contend not only with likely supply chain disruptions but also with the possibility that the tariffs designed to harm Chinese manufacturing and empower America could have precisely the opposite effect.
The International Trade Commission has until June 2nd to decide whether to accept the DOC's final determination. If tariffs are imposed, domestic results will be mixed. American solar manufacturers, which filed the initial complaint in 2024 and triggered the DOC's investigation, will likely benefit immediately from relief from overseas competition. However, in the short term, the price of solar panels in the United States is likely to rise. Since news about the tariffs broke, companies like First Solar have seen significant decreases in their stock prices. Tariff proponents argue that, in the longer term, the American solar industry will expand, bringing jobs to the US.
Currently, 77% of all American solar module imports originate in the countries named in the DOC's report. U.S. solar manufacturing has grown in recent years and will need to continue to do so to meet the predicted increase in demand. The American solar cell industry produced only 2.2% of the global supply in 2023, while the demand for solar technology and for energy overall continues to grow rapidly. Even with tariffs in place, the high cost of US manufacturing may hinder the transition to solar energy in America.
The Southeast Asian market is heavily linked to China, the world's foremost solar energy leader. Beijing controls roughly 80% of the global solar supply chain and continues focusing on growing the industry abroad. Chinese domestic electricity production capacity from solar also continues to grow, boasting a 227 gigawatt increase in 2024. This brought it to the top rank globally at 887 GW – more than quadruple that of the second-place United States.
Cambodian, Malaysian, Thai, and Vietnamese solar manufacturers could sell back to China, break into the emerging Middle Eastern and European markets, or focus more on their largely untapped domestic markets. Experts believe that roadblocks remain for demand to increase exponentially in domestic South-Eastern markets, as buy-in and infrastructure tend to be lacking in these markets. In light of the coming tariffs, many Chinese and foreign-owned solar cell manufacturers have already moved out of the four countries.
The path ahead for the United States will necessitate substantial investment and growth in American solar cell production. The White House has placed greater emphasis on promoting fossil fuels and nuclear energy rather than on renewable energy. However, limiting China's market share in the solar energy industry is critical to reducing its value offerings overseas. On the other hand, American renewable energy continues to grow, and even outproduced fossil fuels in terms of total electricity flowing to the U.S. grid for the first time in March 2025. Reports indicate that even in the face of a government skeptical of clean energy, rising electricity demand will enable 'green' production to grow rapidly.
China is likely to maintain its current course, regardless of the tariffs. The Chinese government is far from pleased with the recent developments, warning not only of negative consequences but also potential breaches in World Trade Organization rules by the United States. There is the possibility of further retaliatory tariffs from Beijing. Still, China primarily focuses on growing its international influence rather than wrestling with the United States.
Cambodia, Malaysia, Thailand, and Vietnam will face the brunt of the economic harm from these tariffs. This economic dislocation may be a boon to Beijing's regional foreign policy aspirations. Vietnam has already come to the negotiating table looking to avoid the worst of what the tariffs could bring, and others may follow suit.
As with the broader wave of tariffs announced at the beginning of April, a pause, reduced rates, or even the abandonment of the solar production tariffs remain possible. However, if implemented, these tariffs could drive significant shifts in the global distribution of photovoltaic panel and component production, adversely affecting the competitiveness of the American solar industry and impacting US ties with South Asian partners.