Subscribe
Today’s print edition
Home Delivery
To understand U.S. President Donald Trump’s latest move to protect American solar manufacturers, it helps to follow the trail of a 32,000-kilometer trade route running through Kenya and a tiny Indonesian island off the coast of Singapore.
The route allowed companies to obscure manufacturing work done in China and Indonesia to deliver solar panels to the lucrative U.S. market without triggering tariffs, according to an analysis of trade and company data by Bloomberg News. And it was built in less than a year, quickly growing to support trade flows of more than $100 million monthly.
That kind of rapid reshuffling of global trade flows had become common in the solar industry in recent years as U.S. officials tried to crack down on what they say are unfair trade practices employed by China. In response, companies would shift production to a new country — for example to Vietnam then to Indonesia — Washington would follow with a new slate of tariffs, and the firms would seek new places, always staying one step ahead.
The sweeping trade measures ordered by Trump earlier this month are intended to put an end to this game of “Whack-a-Mole” by targeting all countries imposing with tariffs and price floors on imported polysilicon and its derivatives, including wafers, cells and modules. These will be subject to minimum import prices above current market levels along with 15% tariffs beginning Dec. 4.
The China-Africa-Southeast Asia-U.S. trade route shows the lengths companies are willing to go to access the U.S. market, where prices are more than double the global average because of the yearslong battle against Chinese imports. And the route’s success in skirting duties encapsulates why the U.S. government ultimately abandoned its country-specific approach in its aim to protect its solar industry.
Here’s how the trade route operates in practice.
The first sign of circumvention appeared in March, one month after preliminary U.S. tariffs aimed at Indonesian solar imports took effect. U.S. customs data showed solar panel imports from Indonesia, the largest source of U.S. imports in 2025, dropped sharply, suggesting the tariffs were working.
However, Indonesia’s export data told a different story. Exports of solar panels from Indonesia to the U.S. did not collapse after the tariffs and recovered from a slowdown that began in late 2025. The discrepancy suggests some shipments leaving Indonesia were not being recorded as Indonesian products when entering the U.S..
The explanation lies in U.S. customs rules. Under the “substantial transformation” standard, a product’s origin is determined by where it gains its essential character. For solar panels, past customs rulings have established that solar cells, rather than final assembly, determine country of origin.
This creates an opportunity for manufacturers. Solar cells account for roughly 50%-60% of a panel’s cost but are relatively lightweight, making them inexpensive to ship long distances. Beginning in January, Indonesian assemblers — all based on the island of Batam, which is turning into a major manufacturing hub due to Trump’s trade war — increasingly sourced cells from Kenya and Nigeria while importing other components from China. At the same time, U.S. imports of solar panels declared as originating from those African countries surged, approaching $100 million per month by June.
An analysis of trade statistics, customs records and corporate filings identified a supply chain linking Chinese wafer producers, newly established solar-cell factories in Africa and panel assembly operations in Indonesia. African factories imported wafers from China, converted them into cells, and shipped the cells to Indonesian manufacturers, which assembled and exported finished panels to the U.S..
Indonesia’s government is aware of the discrepancies between the U.S. statistics and its own, and believes they are not significant and the data is relatively in line, said Johni Martha, director general of international trade negotiation at the country’s Ministry of Trade. Indonesia remains committed to ensuring its exports are compliant with international laws, and doesn’t support practices intended to circumvent rules of its partner countries, he said.
“These differences between export and import statistics cannot serve as a basis for concluding that there has been any misrepresentation of the country of origin of the goods or any attempt to circumvent tariffs,” he said.
Government officials in the U.S., Nigeria and Kenya did not reply to requests for comment.
Several of the Kenyan factories appear to have been built only recently. Satellite imagery indicates that production facilities near Nairobi and Mombasa were largely completed between mid-2025 and early 2026. Customs records show these facilities importing wafers from China and exporting cells to Indonesian manufacturers whose export volumes to the U.S. closely matched their imports of cells and other components.
The same pattern appears in Nigeria. A newly emerged solar-cell supplier shipped nearly $100 million of cells to Indonesia in the first half of 2026. Trade records also reveal links between Chinese equipment suppliers, African cell makers and Indonesian assemblers, illustrating a complex supply chain that spans three continents.
Still, the latest U.S. tariffs may not entirely vanquish the new trade route. The Dec. 4 start date of the new import controls will give companies a few months to continue shipments, although U.S. regulators said they would keep a sharp eye on anyone who seems to be massively ramping up purchases to build up a stockpile before the new order goes into effect. There are also exceptions carved out to allow continued imports for companies that promise to start construction on new U.S. factories by the end of Trump’s term in office.
For Chinese manufacturers, there will still be strong drivers to expand overseas even if the U.S. closes circumvention loopholes. Persistent overcapacity and price wars at home have eroded domestic profit margins to near-zero, while the government and industry itself are focusing on phasing out inefficient capacity and enhancing price discipline.
Overseas markets offer much better returns. In addition, the global energy transition and the impact of the Iran war also mean more demand for solar energy. China’s clean-tech companies, which dominate the global supply chain, stand to become the biggest beneficiary.
As such, the motive for going overseas “is not short-term in nature,” said Muyi Yang, a Sydney-based analyst with clean-energy think tank Ember. “So, I would not see every new factory simply as an attempt to get around the latest tariff. Increasingly, companies are looking for future markets and seeking to establish a long-term presence there.”
As the price threshold in the U.S. is raised, some solar modules originally planned for the U.S. may shift to other markets such as Latin America, the Middle East and Asia-Pacific, which Yang says will become important markets and not merely “export platforms” for Chinese companies.
In a time of both misinformation and too much information,
quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.
With your current subscription plan you can comment on stories. However, before writing your first comment, please create a display name in the Profile section of your subscriber account page.
Your subscription plan doesn’t allow commenting. To learn more see our FAQ
Sponsored contents planned and edited by JT Media Enterprise Division.
広告出稿に関するおといあわせはこちらまで
Read more
