Wood Mackenzie warns that the proposed Section 232 tariffs on polysilicon could disrupt the US solar industry, as China controls 95% of the global polysilicon capacity. With REC Silicon’s Moses Lake factory shutdown, the US lacks domestic supply, and alternatives are scarce and slow to scale.
Calling the Section 232 tariff investigation the biggest supply chain challenge for the US solar industry, Wood Mackenzie’s Research Analyst, Solar Module Technology and Markets, Elissa Pierce, fears that tariffs on this single component could ‘choke’ the entire US solar market.
Pierce is referring to the US Department of Commerce’s (DOC) recent national security review launched into polysilicon imports under Section 232 of the Trade Expansion Act of 1962. A positive decision may trigger tariffs or restrictions on imported polysilicon that the US does not produce enough on its own (see US Launches National Security Investigation Into Polysilicon Imports).
“The Section 232 investigation on polysilicon represents the industry's biggest supply vulnerability,” adds Pierce. “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.”
The US solar industry is already dealing with high module prices (12% year-on-year increase) for shipments coming from the Southeast Asian nations, thanks to the antidumping and countervailing duties (AD/CVD) on panels shipped from Cambodia, Malaysia, Thailand, and Vietnam.
A pivot to the export markets of Laos and Indonesia in the region has not gone down well with the US solar manufacturers who have launched a new AD/CVD petition for solar cells and modules from these countries, along with those from India (see US Solar Makers Seek AD/CVD Tariffs On India, Laos, Indonesia).
Wood Mackenzie notes that cell and module imports from Indonesia, Laos, and India surged to 900 MW and 2.3 GW, respectively, in Q1 2025, with their combined market share growing from 2% to 35% for modules, and 18% for cells compared to Q1 2024.
Since solar cell manufacturing outside these regions is limited, Wood Mackenzie expects most US-bound supply to now face AD/CVD tariffs, which would likely drive prices up.
With curbs on Chinese, Southeast Asian, and potentially Indian solar supply, the Middle East and North Africa (MENA) offer the most viable alternative, benefiting from a lower 10% reciprocal tariff, compared to 26% to 48% for others. However, most MENA capacity will come online only after 2026, as Wood Mackenzie points out. Developers aiming to claim the 48E/45Y ITC/PTC must also ensure FEOC compliance, as much of the existing regional capacity is Chinese-owned.
For now, the situation is not as bad, since record imports in 2023 and 2024 created sufficient inventory to sustain US demand through 2025, but it won’t last long. Monthly import volumes have also declined from an average of 5.3 GW to just 2.4 GW since Q4 2024.
Additionally, analysts estimate up to 23 GW of operating solar module production capacity to be impacted by the foreign entities of concern (FEOC) under the One Big Beautiful Bill Act (OBBBA). Manufacturers may be forced to either restructure their ownership or abandon facilities entirely.
“The 45X manufacturing tax credit potentially offers a critical lifeline for domestic producers,” according to Wood Mackenzie. “Without these credits, US manufacturers' margins would be eliminated entirely, making domestic production unviable unless prices are increased.”
According to Pierce, “These new market distortions could ultimately harm renewable energy deployment while potentially precluding domestic manufacturers from receiving the 45X tax credits due to the FEOC restrictions.”
