Trump's New Catastrophe: The Whole World Could Feel the Impact
The Donald Trump administration is preparing to set a minimum import price while simultaneously imposing tariffs on polysilicon and its derivative products. This policy has the potential to alter global supply chains for solar panels and semiconductors, two sectors crucial to the energy and artificial intelligence (AI) industries.
Citing Reuters, the plan is being finalised and is expected to be announced by the end of the month. Four sources familiar with the discussions said the policy is intended to protect US-based polysilicon factories owned by Hemlock Semiconductor and Wacker Chemie from China’s ambitious expansion in the chip supply chain. Polysilicon is a high-purity form of silicon that serves as the primary raw material in the production of semiconductor wafers and solar panels. Manufacturers process silicon wafers into solar cells, which are then assembled into panels used in solar power projects.
Reuters reported that the policy is part of the findings from a year-long national security investigation conducted by the US Department of Commerce under Section 232 of the Trade Expansion Act of 1962. For the first time, it has been revealed that the Trump administration will implement a hybrid system combining a minimum import price with tariffs on polysilicon and its downstream products. The US government considers this step essential to curbing China’s dominance in the polysilicon sector, where it currently controls approximately 80% of global solar panel manufacturing capacity.
Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, stated that China’s dominance was built through massive subsidies and overcapacity. ‘China built its dominance in the polysilicon industry through subsidies and chronic overcapacity that pushed prices below sustainable levels and weakened competitors,’ he said. ‘A minimum price combined with tariffs could give US producers room to survive, but the policy must be carefully calibrated to ensure supply from trusted sources remains available while domestic wafer and solar cell production capacity catches up.’ The White House declined to comment before Trump makes a final decision. Meanwhile, the Chinese Embassy in Washington condemned the trade investigation, with a spokesperson urging the US to immediately halt the Section 232 tariffs and resolve concerns through equal dialogue.
The Reuters report immediately triggered a surge in shares of several US-listed solar manufacturers. Corning closed up 9.4%, First Solar rose 4.7%, T1 Energy jumped 9.9%, Canadian Solar gained 5.6%, and Toyo increased by 1.7%. Trump’s policy could also significantly impact the US chip industry. Although demand for polysilicon for semiconductors accounts for only about 2.4% of global demand, the chip industry is heavily reliant on polysilicon production capacity, which has historically been supported by strong demand from the solar energy sector.
In its report, Reuters noted that the US administration must carefully balance supporting domestic producers against raising costs for chips and solar panels, products for which demand is currently soaring amid a boom in data centre construction. Industry associations representing solar energy developers and semiconductor buyers have warned the government that tariffs could drive up the cost of building solar power plants and increase prices for a range of goods, from consumer electronics to motor vehicles. Even some manufacturers are anxious about the policy’s impact on demand for their products. ‘The market could start seeing projects fall by the wayside’ if costs become too high, said Martin Pochtaruk, CEO of solar panel manufacturer Heliene, which operates a factory in Minnesota, in an interview. He described the solar industry’s involvement in a trade investigation originally focused on chips as ‘collateral damage’.