New tariffs and price floors
President Donald Trump has issued an executive order imposing 15% tariffs on imported polysilicon derivatives, which include silicon wafers, photovoltaic cells and solar modules, starting on December 4. The directive also introduces minimum pricing levels for various products, such as $100 per kilogram for polysilicon ingots and wafers, 22 cents per watt for solar cells, and 38 cents per watt for solar modules. These tariffs and price floors are designed to support and stimulate domestic production of polysilicon within the United States.
The administration’s goal is to reduce dependence on foreign supplies by fostering a self-sustaining U.S. solar supply chain. This initiative is also expected to bolster the semiconductor industry, as polysilicon is a key component in the production of chips used in a wide range of products, from consumer electronics to critical infrastructure.
Impact on solar and semiconductor industries
Trump's decision follows years of U.S. trade investigations and legal actions targeting solar equipment from China and several Southeast Asian countries. These efforts have aimed to prevent foreign producers from bypassing tariffs by shifting production. However, the new tariffs could lead to higher solar module prices, which poses additional challenges for renewable energy developers. They are already coping with reduced federal subsidies and a shift in U.S. energy policy toward fossil fuels.
The United States was once a dominant player in the production of polysilicon during the early 2000s, but Chinese companies have since taken over, becoming the leading global producers. The new tariffs and pricing measures are expected to create a level playing field for American manufacturers by making foreign alternatives less competitive.
Reactions to the order have been mixed. Shares of companies involved in domestic solar manufacturing rose in after-hours trading. For example, First Solar Inc., the largest solar producer in the U.S., saw its stock increase by as much as 8%. T1 Energy Inc. also experienced gains, with its shares climbing 6.3%. Still, some U.S. producers expressed concern that the delayed implementation of the tariffs might allow foreign manufacturers to stockpile duty-free equipment before the new rules take effect.
Incentives for domestic production
Trump’s directive includes a new incentive program aimed at promoting domestic production of polysilicon and its related products. The Commerce Secretary has the authority to negotiate company-specific agreements to support these investments. These incentives are part of a broader effort to bring manufacturing back to the U.S., aligning with the administration’s focus on reshoring key industries.
Additionally, the order allows for tariff relief in some cases for firms that submit approved onshoring plans to the Commerce Department. Companies that meet the criteria for these plans can import essential production equipment and materials without paying the new tariffs. This provision is designed to make it easier for U.S. companies to compete and invest in domestic manufacturing.
Trump’s move is being praised by industry groups and manufacturing allies. Jon Toomey, president of the Coalition for a Prosperous America, stated that this marks the first time the U.S. has protected the entire solar supply chain in a single action, which also supports manufacturers that operate within the country. The initiative is seen as a strategic step toward strengthening the domestic semiconductor supply chain.
Companies such as First Solar, T1 Energy, and Hanwha QCells have expressed strong support for the action. Dan Barcelo, CEO of T1 Energy, described it as a decisive win for advanced American manufacturing and for investment in domestic energy supply chains. The new tariffs and incentives open the door for more direct investment in U.S. cell and wafer manufacturing, which could help reduce the nation’s reliance on foreign producers.
T1 Energy has previously disclosed supply contracts for American polysilicon and wafers from Hemlock Semiconductor and Corning. T1’s 5GW solar module facility, G1_Dallas, can produce enough solar modules annually to generate electricity equivalent to the usage of more than one million American homes. T1’s 2.1GW solar cell fab, G2_Austin, is under construction and expected to produce its first solar cells in Q1 2027. Upon G2’s completion, T1 expects to have a domestic solar supply chain, utilizing its recently acquired TOPCon technology and intellectual property.
The administration has previously attempted to encourage domestic production through other methods, including offering tax credit bonuses for developers using American-made solar equipment. However, these incentives have since been phased out. The current approach under Trump’s order is considered more robust and targeted, with an emphasis on creating a sustainable domestic supply chain.
At the heart of the issue are solar-grade and electronics-grade polysilicon. These refined silicon crystals are fundamental to the technologies that power modern life. Electronics-grade polysilicon is essential for the semiconductor manufacturing process, serving as the foundation for chips used in smartphones, medical devices, precision-guided weapons, and flight-control systems. Solar-grade polysilicon, while less pure, is the primary ingredient in the production of crystalline silicon solar panels used to generate electricity.
This investigation examined the supply chain for polysilicon and its derivatives, revealing vulnerabilities in the U.S. system and prompting the consideration of levies and import restrictions. The administration is using this probe as part of a broader set of actions under Section 232 of the Trade Expansion Act of 1962, which allows the president to impose tariffs for reasons of national security.
Trump is working to revitalize the U.S. The current order is viewed as a significant step in the effort to rebuild and diversify the U.S. supply chain for critical materials. By combining tariffs, price floors, and incentives, the administration aims to create a comprehensive strategy for reshoring production and safeguarding national interests.