Impact of adjusted Section 301 tariffs on solar industry

Background

The U.S. has imposed tariffs under Section 301 of the 1974 Trade Act on Chinese imports since 2018 in response to concerns over technology transfer and intellectual property rights. The move profoundly impacted the U.S.-China trade relations, with crucial consequences for the PV industry. The four-year statutory review of the tariffs started in 2022 and was finalized by the United States Trade Representative (USTR) in 2024, with a significant change to tariffs on PV products.
 

Tariff rate adjustments

The Biden Administration directed the Trade Representative to increase tariffs under the Section 301 on September 13, 2024, raising tariff rates on cells and modules from 25% to 50%; yet, the implementation date was postponed from August 1 to September 27. Notably, the adjusted 301 tariff expands to cover Chinese exports of polysilicon and mono-Si wafers, with a 50% tariff rate set to take effect on January 1, 2025. This move is expected to affect the upstream sector in the US PV supply chain.


 

• Cells and modules

The U.S. had imposed several trade barriers against Chinese solar cell and module imports. In addition to the original 25% tariff under the Section 301, there are anti-dumping and countervailing duties (AD/CVD) that have been imposed since 2012 as well as the Section 201 tariffs targeting cells and modules from all countries. As a result, cell and module imports from China to the U.S. have significantly decreased in recent years. The new 301 tariff increases will have minimal impact on the PV market.

• Polysilicon and wafers

As the U.S. currently has a planned wafer capacity of about 10.3 GW, there is no significant demand for polysilicon imports, meaning that the impact of new tariffs on polysilicon won't reveal until 2026.

As cell production capacity in the U.S. gradually comes online in 2024, local cell manufacturers will remain reliant on imported wafers. The new tariffs will likely drive the shift of wafer import source from China to Southeast Asia. According to InfoLink’ statistics, Southeast Asia has 39 GW of wafer capacity as of September. The current wafer capacity in Southeast Asia can meet US cell makers' wafer demand for 2025.
 

PV manufacturing equipment exemption

USTR announced an exemption list for PV equipment under the Section 301 on September 12, 2024. Fourteen exemption requests were approved, while five exemptions for PV module manufacturing equipment were rejected. The exempted equipment primarily pertains to the ingot, wafers, and cell manufacturing, aimed at boosting US production and reducing reliance on Chinese equipment.

The rejection of the exemption application for module manufacturing equipment reflects the US government's comprehensive considerations in supporting domestic industries. The strategy aims to promote the import of upstream critical equipment while maintaining moderate protection for the mid-to-downstream supply chain, balancing the need to foster domestic manufacturing development with cutting reliance on foreign sources.


 

Conclusion & Outlook

Given the sharp reduction in imports of Chinese cells and modules, the recent adjustment of the Section 301 tariffs will have little short-term impact on the US PV industry. However, with domestic wafer and cell capacities gradually ramping up in the U.S., the mid-to-long-term impact of the Section 301 tariffs will become evident. The exemption policy for PV equipment demonstrates the US government's intention to boost domestic manufacturing by exempting some critical equipment, thereby providing strategic support to the midstream sector in the PV supply chain.

Companies must closely monitor US policy changes, particularly regarding tariffs on equipment and raw materials. As the US government continues strengthening its strategic focus on domestic manufacturing, companies expanding to the US market should consider tariffs, policy stability, and local infrastructure development. Keeping track of the latest market dynamics is crucial to maintaining competitiveness amid a rapidly changing market.

InfoLink has launched the US Market Report: PV Supply Chain Analysis and Market Prospect, providing an in-depth analysis of current market demand, policy trends, and future directions, helping companies make successful decisions in a complex market. For more information, please contact us via [email protected]