According to a report from Bloomberg, the USA is considering placing tariffs on Southeast Asia’s solar industry – the largest producer of solar panels after China.
The news comes as the USA accuses Chinese-run factories in the region, which have opened in the last decade, of avoiding USA import levies on their home market through relocating.
The report notes that three Chinese-run major industry players, including LONGi and Trina Solar, have reduced their presence in four countries in Southeast Asia as southeast as the USA considers tariffs on the region.
Thailand, Vietnam, Malaysia, and Cambodia make up almost half the solar production capacity outside of China. BloombergNEF notes that these markets provide alternatives to the USA for Chinese solar firms.
Chinese manufacturers originally began to invest in Southeast Asia following the introduction of tariffs in 2012 by the USA on imports coming directly from China – a trend that continues into 2024.
Yana Hryshko, the head of global solar supply chain research at Wood Mackenzie Ltd, explained that some Chinese manufacturers are looking to relocate if the tariff levels are considered unacceptable, adding: “The mood of the suppliers is to pack the lines, especially the cell lines, and move them to either Indonesia, Laos or the Middle East.”
Tariffs continue
The news comes as the USA continues to implement tariffs on China and Asia to combat low-cost solar imports. US solar producers have been calling for more protections on their home markets, with similar pressure on the EU coming from European producers.
In June, the US International Trade Commission ruled that low-cost solar imports from China and Southeast Asia were harming the USA’s solar industry and panel manufacturers.
A USA-led investigation in August 2023 found that China-based panel exporters were illegally bypassing the tariffs, which led to the implementation of taxes of differing levels against five Chinese companies.
Since then, it has been reported that LONGi and Trina Solar have scaled back their Southeast Asian operations by reducing capacity, and Jinko Solar has shut down a Malaysian plant.
According to Dennis Ip, an analyst at Daiwa Capital Markets, older plants may close but newer plants may stay open if alternative markets can be considered. As such, some Southeast Asian facilities may stay open if producers can export to India, Europe, and further.
Deborah Elms, Head of Trade Policy at Asian non-profit Hinrich Foundation explains that the USA’s solar industry isn’t booming as expected, but tariffs on Chinese imports will likely continue. Notably, Elms anticipates this being the case if US Republican candidate Donald Trump is elected for his second term.
