A tightened U.S. solar trade environment

From pv magazine RE+ Special Edition

Imports are a huge portion of the U.S. supply of solar, but new laws are attempting to swing the pendulum in order to drive more domestic manufacturing. In 2024, about 75% of solar cells and modules were imported, according to U.S. International Trade Commission data.

Between new tariff rates, expanded antidumping and countervailing duty petitions and investigations, foreign entity of concern (FEOC) restrictions, domestic content requirements, and more, there’s a lot to keep track of in the shifting landscape of trade policy

Trump tariffs

President Donald Trump introduced a 10% baseline tariff in April 2025, and introduced country-specific “reciprocal tariff ” rates that can vary significantly. For solar, the impact of tariffs started even earlier.

Trump signed an executive order in February 2025 adding a 25% tariff to steel and aluminum, key materials in solar manufacturing: Aluminum is used in frames and roof racking, and steel is used for ground mounted trackers and construction materials. The rate increased in June, when the U.S. government implemented a 50% tariff on most imported steel and aluminum products. Separate tariffs have also been applied to “energy and energy products.”

The president has expanded Section 301 tariffs on components imported from China, too. Solar energy resources – including solar polysilicon, wafers, and cells – are now subject to 60% tariffs.

A McKinsey analysis forecast that installed solar capacity could be 9% lower in the United States and 7% lower in the European Union by 2035 under the highest-tariff scenario compared to the status quo in late 2024.

AD/CVD

For years, the solar industry has navigated antidumping and countervailing duty (AD/CVD) enforcement by the U.S. Department of Commerce under a quasi-judicial investigative process launched by select U.S. manufacturers that claim the market is distorted by product dumping from Chinese suppliers.

In April, Commerce assessed unexpectedly high AD/CVD tariff rates on suppliers from four Southeastern Asian countries that have been the focus of such tariffs for a few years under multiple investigations.

More recently, a petition filed by Alliance for American Solar Manufacturing and Trade – which includes First Solar, Mission Solar Energy, and Qcells – requested investigations into “illegal trade practices by largely Chinese-owned manufacturers operating in Laos and Indonesia, as well as companies headquartered in India.”

The alliance said it has found dumping margins of 89.65% for imports from Indonesia, 245.79% to 249.09% for Laos, and 213.96% for India. Should rates like these be applied, challenges may arise for the U.S. supply of cells, said Clean Energy Associates (CEA). The U.S. industry produces only a fraction of what is needed to meet domestic cell demand and relies on imports for its module assembly factories.

“This is almost certainly going to shut off supply from these three countries, and it couldn’t come at a worse time for the U.S. solar market,” said Christian Roselund, senior analyst at CEA.

Entity of concern

Among the many changes in the Republican federal budget bill are the new, more stringent FEOC restrictions. The act denies federal tax credits – including the 48E Investment Tax Credit, the 45Y Production Tax Credit, and the 45X Advanced Manufacturing Tax Credit – to projects and products found in violation of FEOC restrictions. If projects are found to have “material assistance” during construction from a “prohibited foreign entity,” they are ineligible to receive credits.

Prohibited foreign entities include companies that have direct or indirect interest of 50% or more from “Specified Foreign Entities,” (SFE) which include Russia, Iran, North Korea, and, crucially, China.

“Prohibited foreign entities” also applies to entities “influenced” by the listed countries. Influence is determined by an entity’s right to assign a board member or executive officer, by showing at least 25% ownership from an SFE, collective ownership of at least 40% from multiple SFEs, or an SFE holding at least 15% of debt in the entity.

Solar projects that start construction in 2026 must contain 40% content with no “material assistance,” increasing over time to 60% for projects starting construction after 2029. For energy storage, the thresholds are 55% for projects that start construction in 2026, increasing over time to 75% for storage projects starting construction after 2029.

For 45X manufacturing, producers looking to acquire the tax credit must have a percentage of raw materials and parts not supplied by prohibited foreign entities. For solar equipment, 50% of the cost must not be provided from prohibited foreign entities. This increases to 85% in 2029. For batteries and battery components, it is 60% in 2026, increasing to 85% in 2029.

A 20% penalty will be imposed on any taxpayer that gets the calculation wrong if the taxpayer ends up paying more than 1% less tax than it should have as a result. Starting in 2028, projects are subject to 10 years of recapture of tax credits if any payments are made to FEOC restricted entities.

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