US Section 232 solar import hurdles: Well meant, not well done

There are good reasons for protecting domestic PV production against price dumping. However, the new US minimum import prices under Section 232 of the Trade Expansion Act raise questions.

Analysis by Johannes Bernreuter, Head of Bernreuter Research

The new US import restrictions for polysilicon, wafers, solar cells and modules, which President Donald Trump announced under Section 232 of the Trade Expansion Act on August 6, revitalize a 15-year old debate.

In November 2011 the US Department of Commerce started an anti-dumping and countervailing (anti-subsidy) duty investigation on solar modules containing China-made cells. The case was initiated by the US subsidiary of Germany-based PV manufacturer SolarWorld.

The fiasco of the European PV industry

Eight months later, in July 2012, more than 20 European PV companies – led by now defunct SolarWorld – filed an anti-dumping complaint against wafer, cell and module imports from China with the European Commission, the executive body of the European Union (EU).

The complaint sparked a very hot discussion between European PV manufacturers, who wanted to protect their industry against price dumping from China, on one side, and importers, project developers, wholesalers and installers, who were afraid that import restrictions would cause massive job losses in the downstream sector, on the other.

In the end, the European trade commissioner Karel De Gucht reached a compromise with Chinese negotiators: In July 2013, the parties agreed on a minimum import price for Chinese solar modules. Although the regulation was prolonged in December 2015 and March 2017 before it expired in September 2018, it was not successful for three main reasons:

• First of all, the measure came much too late. When it was enacted, the European PV industry was already in the process of collapsing under the weight of cheap Chinese solar modules.
• Second, the minimum import price was tied to an annual import cap of 7 GW, which strangulated the European PV market.
• Third and very important, the EU lacked any form of industrial policy to promote domestic PV production. Since then, legislation has not made much progress: It took the European Commission until March 2026 to present a lukewarm proposal for the Industrial Accelerator Act, which is meant to strengthen Europe’s clean-tech manufacturing base, but is unlikely to come into effect before 2030.

Inexpensive energy supply – a familiar argument

In the discussion about imports of solar components from Chinese manufacturers, there are not few western voices who argue as follows: Local manufacturing makes PV technology expensive and slows down the energy transition, which we cannot afford in view of the climate crisis. Jesse Pichel, a US investment banker at ROTH Capital, puts it bluntly: “If climate change is the major threat, we want all the Chinese panels we can get.”

Along these lines argues Jörg Wuttke, former President of the EU Chamber of Commerce in China: “The Chinese taxpayer is now, in a sense, paying for the German decarbonization strategy, that’s actually quite good.”

The point of inexpensive supply resembles the campaign that German industry associations and utilities ran in the last decade for the Nord Stream 2 natural gas pipeline from Russia to Germany, claiming it would secure cheap energy supply and maintain industrial competitiveness. However, the new pipeline has never entered service after Russia launched the invasion of Ukraine in February 2022.

One single country dominates the global solar supply chain

While Germany was able to secure alternative supplies of natural gas from several sources, the global solar supply chain is dominated by one single country: China. According to the latest data from the China Photovoltaic Industry Association, the country produced 92.1% of polysilicon, 96.9% of wafers, 91.0% of solar cells and 82.8% of modules worldwide in 2025.

The supply chain disruptions during the Covid-19 pandemic gave a foretaste of what the economic dependency on one country can mean. Like Russia, China is governed by an authoritarian regime. The country’s solar supply chain is to a considerable extent based on quartz mined and silicon metal produced with forced labor in the Xinjiang Uyghur Autonomous Region, which accounted for 56.5% of China’s silicon metal output in 2025.

Moreover, President Xi Jinping announced at the congress of the Communist Party of China in October 2022 that “we will (…) carry out military struggles with determination and flexibility (…), and win local wars.” Regarding Taiwan, Xi said in a meeting with US President Joe Biden in November 2023: “China will realize reunification, and this is unstoppable.” The parallels between Xi and Russia’s dictator Vladimir Putin are striking.

Risk assessment: Climate change versus geopolitical dependency

Advocates of the Chinese solar powerhouse argue that a potential stop of PV product deliveries from China is not comparable to a cutoff of fossil fuel supply because it would not affect the energy production from existing solar power plants, but only new PV installations. “One of the most secure sources of energy is a purchased solar panel,” says Pietro Altermatt, Principal Scientist at Chinese integrated PV manufacturer Trina Solar.

Critics respond that a deficit in new solar power capacity would require replacement by more expensive energy sources and drive up electricity rates due to marginal pricing. Moreover, it would take years to build up new production capacity for polysilicon, wafers, solar cells and modules. “A supply crunch won’t cause blackouts today, but it can derail decarbonization for years,” says Abhyuday Titiksh, an engineer and manager at renewable energy consultant SgurrEnergy. “Waiting for a crisis means waiting too long.”

Thus, the discussion ultimately boils down to a risk assessment: Is relying on China as an exclusive low-cost producer of PV components a smart bet in the fight against climate change, or just a naïve calculation? It is certainly not a bad idea to apply the classic financial proverb “Don’t put all your eggs in one basket” not only to financial investments, but also to the supply of PV products, given China’s geopolitical aspirations.

Of course, diversifying solar supply chains and building a local manufacturing base have a price tag. Those who take the geopolitical risk from China seriously regard the higher costs as an insurance premium for resilience to any supply shock.

Cheap solar imports undermine US subsidies for domestic production

To incentivize the domestic production of PV components, the US Congress introduced so-called advanced manufacturing production tax credits with the Inflation Reduction Act (IRA) under the Biden administration in 2022: $3/kg for solar-grade polysilicon (equivalent to 0.6 $Ct/W), $12/m² for wafers (equivalent to approx. 5.2 $Ct/W if used for PERC cells and 4.7 $Ct/W for TOPCon cells), 4 $Ct per watt of nameplate capacity for solar cells and 7 $Ct/W for modules. In addition, the IRA includes a 10% domestic content bonus to the investment tax credit for newly installed solar power plants.

These incentives were only sufficient to attract a large amount of new domestic module production capacity, which now totals 74.1 GW (including about 16.5 GW of US thin-film module capacity from First Solar), according to the August dashboard of the US Solar Energy Industries Association (SEIA). This compares to 48 GW of new PV installations in the US in 2025, as counted by Bloomberg New Energy Finance.

By contrast, operational US solar cell and ingot/wafer production capacities are far more modest: 10.6 GW and 10.3 GW, respectively, according to SEIA; other sources cite even lower numbers. Beside higher technological and financial entry barriers, cheap solar cell and wafer imports have obviously discouraged US investors as a new Chinese overcapacity wave starting in 2024 has driven prices below production costs (see table above).

Since the imposition of anti-dumping and countervailing duties on solar modules containing China-made cells in 2012, the US has launched a series of such investigations against countries importing solar cells and/or modules with input from China into the US: Taiwan in 2014, Cambodia, Malaysia, Thailand and Vietnam in 2024, India, Indonesia and Laos in 2025, and most recently Ethiopia in 2026. It has always been a cat-and-mouse game: Whenever the US imposed new country-specific duties, Chinese manufacturers (or their customers) moved their overseas factories to another location.

Minimum import price for all countries to end the cat-and-mouse game

The new Section 232 trade regime, coming into effect on December 4, intends to terminate this game. It establishes minimum import prices (MIPs) for polysilicon ($21/kg), ingots and wafers ($100/kg, equivalent to approx. 12 $Ct/W for n-type wafers to make TOPCon cells and 15.2 $Ct/W for p-type wafers used for less efficient PERC cells), solar cells (22 $Ct/W) and modules (38 $Ct/W), irrespective of the country of origin. On top of the MIP comes an ad valorem duty rate of 15% for ingots, wafers, cells and modules – but not for polysilicon (some media outlets erroneously reported the opposite). Already existing duties are applied additionally.

An MIP has the disadvantage that the profit resulting from the higher price remains with the foreign supplier of the product; however, it effectively prevents undermining an ad valorem duty through dumping prices. With a combination of MIP and duty, the Trump administration apparently seeks to mitigate the disadvantage of an MIP, but to retain its advantage.

While the purpose of the polysilicon MIP of $21/kg seems to be investment security for Hemlock Semiconductor, the only US-headquartered manufacturer of the material (the plans of Germany’s Wacker for its US polysilicon subsidiary are not quite clear), the MIPs for wafers, solar cells and modules look like they are based on current manufacturing costs of domestic companies.

We have heard that wafer production costs in the US lie between 12 and 13 $Ct/W today. For US-made solar cells, data provider OPIS has reported sales prices of 26 to 28 $Ct/W – a level that is 17 to 19 $Ct/W higher than the current import price of about 9 $Ct/W. This explains the current price gap of 17 $Ct/W between US modules assembled with imported cells (30 $Ct/W) and modules made of US cells (47 $Ct/W – see table above).

In absolute terms, the new MIPs including the 15% duty will raise US module prices by more than 16 $Ct/W (imported modules and those assembled in the US with imported cells) or 10 $Ct/W (modules made of US cells) to a range of 44 to 57 $Ct/W. Due to a lack of statistical data, we have assumed a current average price of 65 $Ct/W for modules made both of US cells and US wafers, taking into account the 9 $Ct/W higher wafer costs and the fact that some modules with US cells made of imported wafers reach prices as high as 70 $Ct/W. The polysilicon MIP will affect the price of modules made of US wafers and cells only marginally (see table above).

Local-content subsidies and import restrictions must be better balanced

On the market, actual prices will develop dynamically, depending on supply and demand. Growing supply of modules made of US cells could weigh on the price just as well as shrinking demand resulting from the significantly increased price level.

All in all, the MIPs (including the 15% duty) will raise the price of most solar modules in the US by 20% to 60% from an already high base. This jump is grist to the mill of those who criticize the negative impact of import restrictions. The high level of the MIPs indeed raises some questions:

• Have the advanced manufacturing production tax credits been taken into account appropriately or at all for setting the level of MIPs?
• Wouldn’t it be smarter to increase the production tax credits in favor of lower MIPs, although this would cost more taxpayer money for the credits?
• Wouldn’t an annual degression of the MIP, similar to the model of the German feed-in tariff, make sense to incentivize cost reductions in domestic manufacturing?

Building a local production base requires a finely balanced combination of local-content subsidies and protective measures against dumping. The new Section 232 regime is not exactly the ideal solution.

The challenge of reaching economies of scale

A joint study by the Fraunhofer Institute for Solar Energy Systems, RCT Solutions (both Germany) and the US National Renewable Energy Laboratory, which was presented at the 41^st European Photovoltaic Solar Energy Conference in Vienna in September 2024, shows that fully locally-made TOPCon solar modules could be produced in the US at a factory-gate price of 30.4 $Ct/W (see table above) – less than half of the current market price of 65 $Ct/W we estimate for such modules. If one completely deducts the advanced manufacturing production tax credits along the value chain – 16.3 $Ct/W in total – one even lands at a price of only 14.1 $Ct/W.

The study assumes a 40,000-ton polysilicon plant, production facilities for ingots, wafers, cells and modules with a capacity of 10 GW each, a net profit margin of 5% for each production stage, and no direct subsidies. This highlights a problem of the US solar industry: It is still lacking economies of scale. Typical capacities of US cell and module factories range from just 1 GW to 3 GW. It is an open question whether the onshoring program announced in Trump’s Section 232 proclamation will do the job of upscaling properly.

If US solar manufacturers don’t tackle this challenge, it is likely that Elon Musk, the megalomaniac CEO of SpaceX, will do it. One need not take Musk’s announcement of a 100 GW solar factory at face value. But the 10 GW benchmark in the study above won’t surely be an insurmountable hurdle for him.