Trade War: US Taxes, an Opportunity for Solar Power in Southeast Asia?

At the end of April, Washington announced its intention to impose tariffs of up to 3.521% on solar panels manufactured in Cambodia, Vietnam, Thailand and Malaysia.

The taxes stem from an investigation launched before Donald Trump's election, which concluded that the targeted companies were receiving "transnational subsidies" from China, in a pattern of dumping that harmed American producers.

These customs duties, pending confirmation in the coming weeks, would be added to other protectionist measures implemented by the United States, such as a 10% floor rate on the vast majority of imported products, and a 145% surcharge on "made in China" products.

These new barriers jeopardize the American market, which, despite recent investments, continues to rely on components manufactured abroad. China accounts for 80% of global solar panel production and holds 80% of the market share in each stage of their manufacturing.

The new tariffs "will make commercial exports of photovoltaics to the United States virtually impossible," said Putra Adhiguna, director of the Energy Shift Institute think tank.

For Chinese producers, already struggling with a saturated domestic market, the new wave of tariffs is certainly bad news.

Slow transition

Many of them have moved their operations to Southeast Asia, hoping to circumvent punitive measures imposed by Washington and the European Union.

The Trump administration plans to impose 3.521% tariffs—more than 35 times the price—on Chinese companies based in Cambodia, and up to 375% on a competitor based in Thailand. Solar panels and cells from Malaysia would face a rate of about 40%.

But according to one expert, this offensive could shift the lines in Southeast Asia.

"Tariffs and the trade war are expected to accelerate the energy transition in Southeast Asia," said Ben McCarron, director of Singapore-based consultancy Asia Research & Engagement.

China will "redouble its efforts" in regional markets, promoting policies that can "enable the rapid adoption of green energy in the region," driven by its exporters, he continued.

Analysts have long warned that countries in the region are making only small steps on the issue, remaining attached to fossil fuels in an era of global warming.

"At the current pace, Southeast Asia risks missing out on opportunities provided by the falling costs of wind and solar, which today cost less than fossil fuels," the think tank Ember wrote in a report published last year.

reluctance

For example, more than 80% of Malaysia's electricity generation relied on fossil fuels in 2024. The country hopes to increase the share of renewables to 24% of its energy mix by 2030, a goal seen as out of step with current challenges.

The prospect of prohibitive taxes represents a double opportunity for the region, says Muyi Yang, chief analyst at Ember.

Until now, the local solar industry has been governed by a "largely opportunistic strategy, based on exploiting national resources or labor advantages in order to make export profits," he explains.

Although it remains difficult to compensate for the absence of an outlet as important as the United States, its players could focus on local markets which "could serve as a natural refuge against external volatility," he continues.

"Success depends on transforming this export dynamic into a domestic cleantech revolution," Yang believes.

"Clearance prices" could attract customers in the region and beyond, but Southeast Asian countries are also likely to hold back in the face of the influx of solar, warns Putra Adhiguna.

Indonesia and India have already implemented measures to promote their domestic production.

"Many will hesitate to import in bulk, prioritizing the trade balance and the local creation of green jobs," he predicts.