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The U.S. solar industry is still assessing the impact of the Section 232 tariffs on polysilicon and its derivatives, according to a report from Solar Power World. The tariffs, set to take effect on December 4, 2026, impose a general 15% duty on imported silicon wafers, cells, and finished panels, along with minimum import prices on polysilicon and related materials.
Jim Wood, CEO of SEG Solar, a module assembler with two Texas factories and a third under construction, expressed concern that panels will become more expensive, noting that his company is currently quoting prices significantly higher than a month ago. He described the situation as negative for U.S. module makers without domestic cell production, saying it makes it harder to compete against imported modules and feels like a no-win situation for those who have already invested in U.S. module factories.
The tariffs are intended to encourage domestic manufacturing by setting floor prices and adding duties on imports, but many panel manufacturers point out that they also face higher costs for upstream components needed to produce solar panels. This pushes domestic panel prices higher, potentially making them more expensive than foreign panels at the minimum import price of 38 cents per watt.
Manufacturing incentives in recent policies have helped the U.S. solar panel industry grow from megawatts of capacity to over 70 gigawatts annually in just five years. However, upstream production of silicon ingots, wafers, and cells has been slower to develop, with only about 4 gigawatts of cell manufacturing currently available domestically.
Alex Zhu, CEO of ES Foundry, which operates a 3-gigawatt cell factory in South Carolina, also sees downsides to the tariffs. He noted that his company, as a smaller player, faces challenges because the economics favor integrated facilities. According to his calculations, the minimum import price on wafers at $100 per kilogram, plus the 15% tariff, brings his wafer costs to about 17 cents per watt, while the minimum import price on finished cells is 22 cents per watt. This leaves only 5 cents per watt as margin, which he says is insufficient to sell in the U.S. market, even with the 4 cents per watt manufacturing tax incentive (45X) for cell companies.
Zhu indicated that an integrated company producing its own cells for its own modules could fare better, as the final panel would only compete with the 38 cents per watt minimum import price and qualify for the higher 7 cents per watt 45X credit. He said that while a module company could cover costs and earn a profit, a cell company would lose money, prompting his company to consider moving into module production.
The possibility of government aid for domestic manufacturers remains uncertain. President Donald Trump has suggested that companies investing in building, expanding, or refurbishing facilities could receive incentives such as tariff breaks or additional production tax credits. However, Zhu noted that many details are still unclear, including whether existing investments would qualify or if incentives would only apply to new investments.
SEG Solar is also considering building a cell factory in the U.S., with Wood saying the need feels even more important now. He expressed hope for more clarity on how to negotiate with the Commerce Department and for helpful carveouts.
For project developers, the tariffs add another layer of complexity. Justin Johnson, CEO of Arevon, described the tariffs as a negative overall because they increase module prices. He said his company already contracts with domestic producers like First Solar to ensure supply, viewing U.S. manufacturing as a hedge against supply disruptions, even if project economics are less favorable on paper.
Despite the tariffs, domestic modules were already being purchased before they took effect. Both SEG Solar and ES Foundry report being sold out through next year. Seth Adams, senior VP of EPC at Standard Solar, said the tariffs will push procurement strategies to focus less on cost and speed and more on long-term bankability and overall project economics.
The full impact of the tariffs may not be felt for some time. Adams estimated that commercial market effects could appear within six months, while Johnson said utility-scale projects might not see effects for up to two years. He noted that projects with 2029 commercial operation dates are currently stalled as the industry waits for clarity.
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