Are US solar tariffs helping or hindering PV manufacturing?

Analysis published last month by the law firm Wiley Rein – led by Tim Brightbill, the lawyer behind most of the recent trade agitations from the US solar industry – said that wafers are the linchpin in the supply chain that could create “significant” problems for the industry. The analysis said that access to tax credits and exposure to unexpected tariffs could be tied to the legal definition of “blue” doped wafers, which have been treated to develop the crucial P/N Junction.

In some cases, doped wafers are effectively regarded as solar cells for legal purposes, and there is conflicting legal precedent for whether a blue or an undoped grey wafer is the determining factor in a solar product’s origin.

Following this analysis, Brightbill took to an online press briefing to argue that more robust tariffs and trade enforcement were the fundamental way that the US can ensure its domestic solar manufacturing industry continues to grow.

He said that the industry will be facing an “investment drop-off” with the end of the domestic content bonus for US-made products, despite “a renaissance in solar manufacturing”. That renaissance is predominantly in crystalline silicon-based module and some cell capacity, and First Solar’s cadmium telluride (CdTe) thin-film capacity.

Brightbill said that the coming changes “make robust trade enforcement more urgent than ever. AD/CVD and the Section 232 polysilicon action are exactly the durable tools our industry needs right now.” There are currently varying antidumping and countervailing duty tariffs on solar cells and modules imported to the US from China, Malaysia, Vietnam, Cambodia and Thailand. There is also an ongoing investigation into cells and modules from India, Laos and Indonesia. The US is also currently conducting an investigation into all imports of polysilicon and its derivatives under Section 232 legislation, on the grounds of national security risk. This is expected to report back sometime in 2026, though timelines are unclear.

Opinions on this vary. US manufacturer T1 Energy, which bought a module assembly facility from Chinese module manufacturing giant Trinasolar, has previously said that Section 232 and AD/CVD tariffs would “boost” the US solar manufacturing industry, and that it would stand to benefit from stricter controls on products entering the US.

First Solar will also broadly benefit from restrictions; as a CdTe thin-film producer, it is isolated from most of the impacts of a probe into polysilicon imports. The company also said it expected the Foreign Entity of Concern (FEOC) restrictions expanded under last summer’s budget reconciliation bill to “strengthen” its position in the market. When we approached Hanwha Qcells for comment on Wiley Rein’s initial analysis, the company directed us to the press briefing given by Brightbill. It has plans to develop US wafer and cell production capacity and a polysilicon supply deal in place with Korean OCI Holdings.

But analysts have warned that the Section 232 tariffs could be hugely disruptive. Wood Mackenzie said in July that the investigation could prove to be the US solar industry’s “biggest supply vulnerability” and could “choke the entire US solar market”. Elissa Pierce, a Wood Mackenzie solar analyst, said: “Unlike module factories built in months, polysilicon facilities require years to develop. This is time the industry may not have as trade tensions escalate, and inventory buffers rapidly deplete.”

While on paper raising barriers to cheap imports puts domestic products on a more even footing, there is a wide gap between US demand and upstream supply which will take a significant time to bridge.

‘US wafer production capacity is extremely limited’

This all pertains to the origin of solar wafers, which are the crucial point in the supply chain based on legal definitions around when a product can conduct electricity. A blue wafer can, a grey wafer can’t.

Aaron Hall, president of renewables data platform Anza, told PV Tech Premium: “There is a clear cost premium associated with using domestically produced wafers versus imported supply, particularly Chinese wafers.

“Based on recent supplier input, that premium appears to be quite variable today, ranging anywhere from ~2 cents to as high as ~10 cents per watt, with a more typical expectation around ~5 cents in a more normalised environment. That variability reflects how early and supply-constrained the domestic wafer market still is.”

Tariffs are intended to close that gap by making imported products more expensive and less attractive, but, as Hall explained, there is currently nowhere near enough crucial US wafer supply to meet demand.

“Today, US wafer production capacity is extremely limited. For example, one of the only active domestic producers is currently at roughly 6GW of annual capacity. Even after accounting for segments of the market, like thin film, that don’t rely on crystalline wafers, domestic supply can only cover a fraction of total demand,” he said.

The current US solar market is around 40GW – while module capacity can cover almost all of that, the lack of upstream capacity won’t be solved quickly by a set of tariffs. If strict supply-wide restrictions were to come in tomorrow, many of those module facilities which rely on imported products, particularly solar wafers, would see their costs and prices rise. This also limits access to tax credits, Hall said, which can be key for young domestic industries:

“This creates a fundamental bottleneck. Even if developers or manufacturers want to use domestic wafers to qualify for domestic content incentives, there simply may not be enough supply available. As a result, access to those wafers, and by extension, eligibility for incentives, becomes constrained, which can drive further pricing pressure.”

Wiley Rein’s original analysis said that lack of clarity over wafer origin rules could restrict access to the domestic content bonus, in particular, which was introduced to incentivise buying US-made products and components. Almost all wafers originate from China, Chinese companies, or operations in Southeast Asia that are subject to AD/CVD levies. As established, current US supply can only meet a maximum of around 6GW a year.

Hall said that, in his estimation, AD/CVD and Section 232 could cause more issues than they solve: “Depending on how those evolve, they could further restrict import pathways or reshape supply chains, potentially exacerbating the supply-demand imbalance and putting additional upward pressure on domestic wafer pricing.”

Ultimately, if limited access to tax credits combines with increasingly costly domestic products, thanks to growing demand, it may be more cost-effective for some solar buyers to pay tariffs and forego any advantages for domestic products. We heard this argument last year, where Christian Roselund, senior policy analyst at Intertek CEA, warned that the combination of draconian FEOC rules, tariffs and a contracting solar market could broadly damage the US solar manufacturing industry.

It is true that while expanding tariff regimes with the promise of supporting domestic industry, actual incentives for solar deployments and most manufacturers have been pared back significantly. Last year, an analyst told PV Tech that the Trump administration’s apparent support for domestic US manufacturing was “doublespeak”.  

Certain big manufacturers may thrive, but the broader industry and its roughly 50GW of module capacity and growing cell capacity may not.

Speaking on the same platform as Brightbill, Danielle Russo, executive director of the Centre for Grid Security at lobby group Securing America’s Future Energy (SAFE), said: “What we don’t want to do is go from an over-leveraged non-peer adversary in Iran to an over-leveraged peer adversary in China — and that is where the domestic solar industry plays such an important role for the United States.”

She is right about solar manufacturing, but it does not seem obvious that a stricter tariff regime is the way to help the upstream solar industry fulfil that role just as it is finding its feet.