China's Photovoltaic Industry in the Face of Tariff Storms

Under the shadow of the US "tariff war," what is the future of the photovoltaic industry, one of China's new three major exports? Currently, China's photovoltaic industry faces dual challenges at home and abroad. Domestically, there is oversupply and increasing demand uncertainty. Internationally, the 'tariff war' launched by the US is impacting the industry. These factors are directly related to companies' profits this year. However, he believes that the "tariff war" is not terrible.

In fact, The US has been suppressing China's photovoltaic industry for a long time. From past "double anti-dumping" investigations to the current arbitrary imposition of "equivalent tariffs." During this process, Chinese photovoltaic companies have become increasingly stronger, with investment layouts spanning Southeast Asia, the United States, and the Middle East. The industry generally believes that there are no winners in the "tariff war." Fang Wenzheng, a photovoltaic analyst at Longzhong Information, stated in an interview with reporters that the US has limited domestic photovoltaic product manufacturing capabilities, especially in the areas of cell and module manufacturing. The US photovoltaic market still heavily relies on China's production capacity in Southeast Asia and the Middle East. If tariffs increase component prices, it will directly impact the costs of US photovoltaic power plant operators. Global Diversified Layout US suppression of China's photovoltaic industry can be traced back to 2011. At that time, the US launched "double anti-dumping" investigations against Chinese photovoltaic products and decided to impose high tariffs in 2012. Since then, the US's suppression tactics have continued to escalate. Since 2018, the US has launched a "301 investigation" targeting US$200 billion worth of Chinese goods and imposed tariffs on products including photovoltaic components and inverters. At the same time, a "201 tariff" was imposed on photovoltaic cells and components exported to the US. To avoid tariff impacts, Chinese photovoltaic companies seized the historical opportunity of the Belt and Road Initiative and rushed to build factories in Southeast Asia, forming the largest photovoltaic industry chain cluster outside of China. The production capacity covers not only the main industry chain links of wafers, cells, and modules, but also extends to auxiliary materials such as glass and backsheets. At that time, Southeast Asia became an overseas "springboard" for exports to the US. "Due to various export restrictions imposed by the US on Chinese photovoltaic components since 2011, especially the high "double anti-dumping", 201, and 301 tariffs, the proportion of Chinese photovoltaic components directly exported to the US is extremely low. In 2024, China's total photovoltaic component exports were 240.91 GW, a year-on-year increase of approximately 27.7%, but the number of photovoltaic components exported to the US was 4 million, accounting for 0.77%. However, with the anti-circumvention investigations and a new round of photovoltaic "double anti-dumping" investigations launched by the US against Malaysia, Thailand, Vietnam, and Cambodia in 2022 and 2024, Southeast Asia has become difficult to serve as a "safe haven" for Chinese photovoltaic companies exporting to the US. Especially in the past year, the aforementioned four Southeast Asian countries have faced a new round of photovoltaic "double anti-dumping" investigations, and the production of some companies has been severely impacted. News of factory closures, production shutdowns, and layoffs have been frequent, and many companies face enormous survival pressure. "We will meet challenges head-on." Since 2023, Chinese photovoltaic companies have gradually shifted their investment focus to the US, the Middle East, and Africa. To date, companies such as Longi Green Energy, JA Solar, JinkoSolar, and Trina Solar have established component factories in the US through joint ventures or sole investments. In addition, many companies such as JA Solar, JinkoSolar, TCL Zhonghuan, GCL Technology, and Jinda Shares have announced investments in Saudi Arabia, the UAE, Oman, and Egypt, covering polysilicon, wafers, cells, modules, brackets, and glass. Now, the US has imposed "equivalent tariffs" globally and relatively high tariffs on Southeast Asian countries. Fang Wenzheng believes that "due to the impact of the new round of "double anti-dumping" investigations and "equivalent tariffs," in the future, companies may shift their production capacity more towards the Middle East and Africa, especially Saudi Arabia and the UAE, These regions are experiencing rapid expansion in photovoltaic installations, and the export share of Chinese photovoltaic components in these regions is also increasing year by year." Currently, the photovoltaic production capacity in the Middle East market has not yet been scaled up, but the tariffs imposed are relatively low. Wang Bohua, honorary chairman of the China Photovoltaic Industry Association, previously suggested that photovoltaic companies should diversify their overseas layouts, not put all their "eggs in one basket," and be wary of a repeat of the Southeast Asian experience in the Middle East. The aforementioned senior photovoltaic industry insider told reporters that against the backdrop of the US adjusting the global trade landscape and promoting the return of manufacturing, the future of the "investment + export" model overseas remains uncertain. At the same time, domestic supply and demand mismatch, manufacturing enterprises under pressure, and demand uncertainty caused by terminal market absorption and electricity market liberalization all await efforts from both supply and demand sides. Overall, the domestic and international challenges facing the photovoltaic industry require comprehensive consideration. The US Cannot Stand Alone Over the past many years, Chinese companies have built the most complete and competitive photovoltaic industry chain system in the world, while the current domestic manufacturing capacity in the US still has significant shortcomings. Fang Wenzheng told reporters that the US's domestic photovoltaic product manufacturing capacity is relatively limited, especially in terms of cell and module manufacturing. Although the US Inflation Reduction Act provides subsidies to domestic photovoltaic product manufacturing companies and has attracted some Chinese photovoltaic companies to invest in and build factories in the US, it is still insufficient to significantly enhance US domestic photovoltaic product manufacturing capacity in the short term. Therefore, the supply of the US photovoltaic market will still rely on China's production capacity in Southeast Asia and the Middle East. Data from InfoLink Consulting shows that insufficient battery production capacity is a key issue for the US photovoltaic market. As of the first quarter of 2025, the US component capacity reached 50.5 GW, but the domestic battery capacity was only 2.3 GW. Excluding thin-film component capacity, the US still has a battery capacity gap of approximately 37 GW. It is estimated that the US will still need to import products from Indonesia and Laos. If Indonesia and Laos cannot fully support order demand, it is speculated that some of the demand may still need to be imported from India or Malaysia, which has "double anti-dumping" tariffs. In fact, in the process of globalization, China and the US have formed a symbiotic relationship of "you in me and me in you." In this round of tariff game, the US cannot stand alone. The latest data from InfoLink Consulting shows that US market prices are affected by policy fluctuations. During the 90-day observation period, some manufacturers' inventory products were required to be urgently shipped, and prices even showed an upward trend, approaching US$0.27-0.3 per watt. "Overall, the increase in tariffs will inevitably increase the cost of US photovoltaic projects, and supply chain prices may also need to be adjusted to cope with tariff pressure." InfoLink Consulting analysis stated. Fang Wenzheng believes that After a 90-day tariff suspension, the likelihood of price increases for domestically produced components in the United States is relatively high. This is because Chinese companies will still face relatively high tariff burdens on upstream raw materials and auxiliary materials needed for battery, film, and glass production in US factories. At the same time, rising component prices will directly affect the costs of US photovoltaic power plant operators. Interviews with some component and auxiliary material companies revealed that the current impact of the additional tariffs on photovoltaic companies is relatively limited, and further observation of subsequent policies is needed. A spokesperson from JinkoSolar told reporters that because the US imposes tariffs on goods globally, this will lead to increased component costs and potentially higher component prices. Currently, the company is also communicating with customers. Considering that the "tariff war" is still being negotiated and relevant policies are constantly changing, further observation of the subsequent impact is needed. A spokesperson from the securities department of Foster told reporters that the company currently has two photovoltaic film production bases in Vietnam and Thailand in Southeast Asia, but the revenue from exports to the US accounts for a relatively small proportion of overseas total revenue. If affected by tariffs, the company will also take measures to respond in the future. However, at this stage, it is necessary to pay attention to the negotiation results between the Vietnamese and Thai governments and the US. Wang Shuai, an analyst at Zhuochuang Information, told reporters that in the early stage, some domestic leading photovoltaic glass companies set up factories in Southeast Asia, and the goods were exported to the US. Affected by tariffs, there is an expectation of reduced demand in the later period. Currently, in terms of the tariff exemption window period, Southeast Asian sources still have a price advantage. If tariffs increase later, their competitiveness will weaken. For the US market, the installed capacity in 2024 will reach a historical peak, but given that some decision-makers in the US focus on conventional energy, there is an expectation of a decline in demand.