President Donald Trump has enacted a directive imposing a 15% tariff and minimum import prices on polysilicon and its derivatives, a move aimed at fortifying the United States’ domestic solar and semiconductor supply chains. Effective December 4, this measure signals a significant shift in US trade policy, driven by concerns over national security and an over-reliance on foreign suppliers.
The proclamation mandates a 15% tariff on imported polysilicon derivatives, including silicon wafers, photovoltaic cells, and solar modules. Concurrently, minimum import prices are established: US$21 per kilogram for raw polysilicon, US$100 per kilogram for polysilicon ingots and wafers, 22 cents per watt for solar cells, and 38 cents per watt for solar modules. This action is designed to stimulate domestic production of polysilicon and related goods, addressing a decade-long struggle to establish a robust US solar manufacturing base. The measures follow previous US trade actions that levied duties on solar equipment from China and several Southeast Asian nations, prompting foreign manufacturers to relocate production to circumvent tariffs.
This new import regime is anticipated to increase the cost of solar modules, presenting an additional challenge for renewable energy developers already contending with the expiration of federal subsidies and a policy environment favouring fossil fuels. Conversely, shares of US companies with domestic solar manufacturing operations saw a notable uptick in after-hours trading, with First Solar Inc. climbing as much as 8% and T1 Energy Inc. rising 6.3%.
The US, once a leader in polysilicon production in the early 2000s, has seen Chinese companies emerge as the dominant global producers. To counter this, the directive includes an incentive program to attract US production of polysilicon and its derivatives. The Commerce Secretary is empowered to negotiate company-specific agreements to encourage these investments. Furthermore, companies demonstrating onshoring plans, subject to Commerce Secretary vetting and approval, may qualify for tariff relief on essential production equipment and inputs.
While the delayed implementation of tariffs may allow renewable energy developers to import and stockpile equipment, the administration has stated its intent to monitor trade and restrict imports from companies found to be engaging in such practices. Manufacturing allies have lauded the initiative. Jon Toomey, president of the Coalition for a Prosperous America, remarked, “For the first time, the United States is protecting the entire solar supply chain with a single action… This is how you reshore an industry.” US solar manufacturers, including First Solar, T1 Energy, and Hanwha QCells, have expressed their support, with T1 CEO Dan Barcelo calling it a “decisive win for advanced American manufacturing.”
The proclamation also opens avenues for direct US investment in cell and wafer manufacturers, building on previous, albeit phased-out, efforts like tax credit bonuses for domestically sourced solar equipment. The focus is on both solar-grade and electronics-grade polysilicon, critical components for semiconductors and solar panels. The tariffs stem from a Commerce Department investigation under Section 232 of the Trade Expansion Act of 1962, aimed at enhancing domestic manufacturing and diversifying supply chains. Advocates for domestic polysilicon production argue that current market prices render US production unprofitable without trade support, advocating for tariffs sufficient to offset Chinese overcapacity and below-cost pricing.
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