3,500% tariffs cloud outlook for US solar industry

The International Trade Commission backed solar tariffs as high as 3,521 percent in a vote Tuesday, shaking up a renewable industry facing multiple headwinds from potential congressional rollbacks of tax credits and cuts in federal spending.

The ITC, a nonpartisan federal agency, concluded unanimously that U.S. manufacturers were “materially injured” by imported solar cells and panels from four Southeast Asian countries. The Commerce Department had affirmed the tariffs against Cambodia, Malaysia, Thailand and Vietnam in April after an investigation that started during the Biden administration, but the final ITC determination sets the stage for actual enforcement of levies.

The decision is a win for several U.S. solar manufacturers — including industry leader First Solar — that filed a petition claiming China was unfairly subsidizing companies in the four countries to illegally dump solar components into the market. Cambodia, Malaysia, Thailand and Vietnam supply the majority of solar panels coming into the U.S.

Solar manufacturing leaders called the tariffs a victory, but said legislation under consideration in Congress could counter beneficial effects for building out a U.S. industry.

“This ruling is a step forward in addressing China’s continuing efforts to undermine the U.S. manufacturing rebuilding effort,” said Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition. “Unfortunately, Congress appears to be about to take two steps back by retroactively repealing the tax incentives to purchase domestic products … all the trade protections in the world won’t make a difference if Congress backtracks on its commitments to reshore this critical industry.”

GOP lawmakers have been weighing legislation as part of the budget reconciliation process that would phase out or weaken various provisions and tax incentives under the Inflation Reduction Act benefiting the solar industry, including credits for advanced manufacturing.

The Solar Energy Industries Association, the leading U.S. industry trade group, called the ITC decision “concerning,” saying it would add an additional layer of tariffs that will raise costs for solar products.

“U.S. solar cell manufacturing is growing for the first time in years, but it is still not at the scale needed to meet demand. This determination especially harms U.S. solar module producers that depend on access to imported solar cells as we ramp up domestic cell manufacturing capacity. Imposing additional tariffs on cell imports at this stage risks stalling progress and undermining the very industry they are meant to support,” said Abigail Ross Hopper, SEIA’s president and CEO.

SEIA released an analysis Monday concluding that legislation that moved through the House Ways and Means Committee this month could jeopardize 300 solar and storage factories and reduce solar generation by 2030 equivalent to the annual electricity consumption of Pennsylvania.

Domestic production of solar panels has surged sixfold since 2023 with help from climate law incentives for manufacturing and purchases of American products. Solar manufacturing jumped from less than $1 billion in annual investments in 2022 to nearly $6 billion last year, according to Rhodium Group.

The new tariffs affect companies and countries at various levels. The 3,521 percent tariffs would hit some companies in Cambodia, which decided to stop participating in the yearlong U.S. investigation. Other tariffs range from roughly 14 percent to as high as 972 percent. The country averages are approximately 652 percent for Cambodia, 34 percent for Malaysia, 375 percent for Thailand and 396 percent for Vietnam.

Tim Brightbill, the lead counsel for the domestic manufacturers, said Tuesday the Commerce Department has a “rigorous process” in calculating tariff rates. “We’re not trying to cut off imports entirely, we just want to make sure they are fairly traded so that U.S. manufacturing can succeed,” he said.

Despite the high percentage of panels coming into the U.S. from Southeast Asia, Carr said he didn’t believe the tariffs would spike costs for solar installations. The cost of solar components is “very low” compared to factors such as financing and interconnection challenges, he said.

Coco Zhang, vice president of environmental, social and governance research at ING, said after the Commerce decision that solar panel production has grown to a level on par with demand with help from the tax credits.

However, numbers “are based on a major assumption — that manufacturers produce at full capacity. Their real capacity is likely far lower,” she said, adding that imports could continue to make up half of panel supplies.

Solar imports from Laos and Indonesia also are increasing to get around the tariffs, she said.

“We are almost looking at a cat-and-mouse game, where solar trades find new paths as U.S. tariff policy evolves,” said Zhang.

DOE, Sunnova and batteries

The tariffs arrive amid multiple pressures on the solar industry, which is expected to dominate new installations to the U.S. grid this year. Along with potential congressional rollbacks of various tax incentives, the Department of Energy is weighing eliminating funding for its solar office, according to circulating documents.

The residential solar industry experienced its first annual decline in seven years in 2024 as lingering high interest rates and cuts to net-metering policies in states like California stymied growth. Policy shifts have affected large companies like Sunnova, which said in March it may not be able to stay in business. Tariff pressures on grid batteries, which are frequently paired with solar, also are a threat to projects.

Energy Secretary Chris Wright has spoken favorably of the industry, saying at an appropriations hearing this month that solar is “an industry source with a future.” He told the Nuclear Energy Institute conference Tuesday, however, that he would like to “more rapidly sunset the technologies that have been around and have been living on decades of subsidies.”

On Tuesday, DOE said in a statement that “no decisions have been made” about several conditional loans and loan guarantees, including $3 billion for Sunnova, that could be on the immediate chopping block,, according to Semafor. Wright has said DOE is conducting a review of department programs and spending. In March, Sunnova said in filings with the Securities and Exchange Commission that it was no longer looking to DOE “for the foreseeable future” for its Project Hestia, which was supported by the loan office.

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}