Trump’s Solar Tariff Plans for Second Term & the Impact on Solar Prices

A second Trump term could bring significant changes to the U.S. solar industry, with expanded tariffs on imported solar panels and components likely to be at the forefront of his trade policy. These tariffs, aimed at protecting domestic manufacturers, have already reshaped the industry by increasing costs and influencing adoption rates. If implemented, new tariffs could further drive up installation costs, strain supply chains, and slow the transition to renewable energy. For consumers, this could mean higher prices for solar installations and longer payback periods, while the industry may face reduced growth and job losses.

In this article, we’ll examine the history of solar tariffs, their effects under Trump and Biden, and the potential consequences of future tariff measures on manufacturers, consumers, and the broader adoption of clean energy.

In This Article:

• History of Solar Tariffs
• Impacts of Solar Tariffs
• Solar Tariffs in Trump’s First Term
• Solar Tariffs in Biden Administration
• Solar Tariffs in Trump’s Second Term
• Potential Impacts of Trade War on Solar
• How Solar Tariffs could Impact Consumers
• Should You Install Solar Panels before Trump Policy Changes?

History of Solar Tariffs

Solar tariffs are not new; they have been used to address international trade imbalances and unfair pricing for decades. For the U.S. solar industry, these tariffs began as a response to the rapid rise of Chinese manufacturers, whose government-subsidized production undercut competitors globally. Understanding this history provides important context for how tariffs evolved and their implications.

• The Rise of China in Solar Manufacturing: Over the last two decades, China emerged as the dominant global supplier of solar panels, manufacturing over 70% of the world’s panels. Chinese manufacturers benefited from government subsidies, low labor costs, and economies of scale. These advantages allowed them to offer solar panels at prices far below competitors, flooding international markets and driving many U.S. producers out of business.
• Antidumping and Countervailing Duties (2012 and 2014): To address these concerns, the U.S. imposed antidumping duties on Chinese panels in 2012, followed by expanded tariffs in 2014. These measures aimed to counteract subsidies and below-cost pricing, but Chinese manufacturers adapted by shifting production to Southeast Asia.
• Pre-Trump Era Challenges: Despite these tariffs, U.S. manufacturers struggled to compete. Domestic production costs remained high compared to imports, leaving the market heavily reliant on foreign panels. While U.S. installation businesses flourished, manufacturers faced ongoing declines.

Impacts of Solar Tariffs

Solar tariffs influence more than just trade balances. Their impacts ripple through the economy, affecting job growth, environmental progress, and energy access for consumers. While tariffs aim to support domestic industries, they often come with unintended consequences.

• Economic Growth vs. Higher Costs: Solar tariffs increase the price of imported panels, which raises installation costs for developers and homeowners. According to the Solar Energy Industries Association (SEIA), the 2018 tariffs resulted in the loss of more than 62,000 jobs, $19 billion in investment, and 10.5 GW of solar capacity, representing a significant slowdown in industry growth. This reduction in capacity affected both residential and utility-scale projects.
• Environmental Consequences: Slower adoption of solar energy due to higher costs delays the transition away from fossil fuels. This prolongs greenhouse gas emissions and undermines efforts to meet climate targets. A report by BloombergNEF warned that tariffs could hinder U.S. progress toward carbon neutrality.
• Supply Chain Disruptions: The solar industry depends on global supply chains for components like inverters and mounting systems. Tariffs on these imports, combined with global shipping challenges, have led to significant delays and cost increases for projects.

Solar Tariffs in Trump’s First Term

President Trump’s administration made tariffs a centerpiece of its trade policy, with significant implications for the solar sector. By imposing Section 201 tariffs on imported panels in 2018, the administration aimed to protect domestic manufacturers. While the policy provided temporary relief, its broader effects were mixed.

• Policy Details: Trump’s Section 201 tariffs imposed a 30% tax on imported solar panels and modules, with a 5% annual reduction until they reached 15% by 2022. An exemption for the first 2.5 gigawatts of solar cells per year aimed to shield smaller projects, but many developers still faced higher costs.
• Domestic Manufacturing Impacts: While tariffs temporarily boosted domestic production, they did not create a sustainable manufacturing sector. U.S. manufacturers struggled with high costs and reliance on imported components, limiting their competitiveness.
• Industry and Job Losses: According to SEIA, the tariffs led to 62,000 fewer solar jobs, primarily in installation. This impact was especially pronounced in states like California, Texas, and Florida, which rely heavily on solar.

Solar Tariffs in the Biden Administration

The Biden administration retained many of Trump’s trade policies while emphasizing renewable energy expansion. Biden’s approach sought to balance the need for domestic manufacturing with the urgency of accelerating clean energy adoption.

• Extension of Tariffs with Exemptions: In 2022, Biden extended the Section 201 tariffs on imported crystalline silicon solar panels for an additional four years, starting at 14.75% and decreasing by 0.25% annually. Notably, bifacial solar panels were exempted from these tariffs, and the quota for duty-free imports of solar cells was increased from 2.5 GW to 5 GW. The original tariffs, implemented in 2018 under the Trump administration, aimed to support U.S. solar panel manufacturers by making imported panels more expensive. This exemption aimed to alleviate supply chain pressures and ensure affordable access to solar panels.
• Inflation Reduction Act: The 2022 Inflation Reduction Act (IRA) represented a significant investment in the U.S. solar industry, aiming to bolster domestic manufacturing and accelerate renewable energy adoption. The IRA reinstated the solar tax credit (Investment Tax Credit, or ITC) at 30% for solar photovoltaic systems, effective from January 1, 2022, and extended it through at least 2032, providing long-term financial incentives for solar installations. Additionally, the IRA introduced production tax credits and manufacturing incentives to stimulate domestic solar component production, addressing supply chain challenges and reducing reliance on imports. According to the SEA, These measures are projected to significantly increase solar deployment, with the Solar Energy Industries Association estimating that the IRA will lead to a 40% increase in U.S. solar capacity by 2027, reinforcing the country’s commitment to clean energy and climate goals.

Solar Tariffs in Trump’s Second Term

In his second term, President Trump is likely to implement stricter tariffs, focusing on expanding protections for domestic manufacturers. His potential policies could have significant implications for the solar market.

• Expanded Tariff Scope: President Trump has proposed reinstating higher tariffs on imported solar panels and extending these tariffs to broad swath of foreign products, which could include components such as inverters and batteries. By including these components under tariff measures, Trump’s policy aims to further protect domestic manufacturers from foreign competition, particularly those producing entire solar solutions. However, such tariffs would likely drive up costs for installers and developers who rely heavily on imported equipment, potentially slowing down the pace of solar project deployments. Increased equipment costs could lead to tighter profit margins for installers and developers, ultimately affecting the affordability of solar energy for consumers.
  
• Targeting New Regions: Southeast Asian countries, including Vietnam, Malaysia, and Thailand, now dominate U.S. solar imports, accounting for the majority of photovoltaic (PV) panels entering the country. This shift occurred after Chinese manufacturers moved production to these countries to avoid existing antidumping and countervailing tariffs imposed by the United States.
  
  Trump has indicated that a potential second-term tariff expansion could target these regions, further tightening the supply chain for U.S. solar projects. New tariffs on imports from Southeast Asia would increase costs for solar panels and exacerbate supply chain constraints, delaying projects and reducing the financial viability of many installations. Industry experts warn that such policies could undermine the growth of renewable energy in the U.S., as the domestic manufacturing capacity for solar panels and components is not yet sufficient to meet demand.

Potential Impacts of a Trade War on Solar

A trade war targeting solar-producing nations, such as China, Vietnam, and Malaysia, could significantly impact the U.S. solar market. The United States imports the majority of its solar panels and components, relying heavily on these countries for cost-effective supply. New tariffs imposed during a trade war would increase equipment costs, disrupt supply chains, and slow the pace of renewable energy adoption. These consequences could undermine climate goals, reduce industry competitiveness, and limit access to affordable solar energy for consumers and businesses.

• Cost Implications: According to a 2024 study by SEIA, potential new tariffs could raise the cost of solar panel imports by 10-15%, significantly increasing overall installation expenses for residential, commercial, and utility-scale projects. This price increase could deter investment in new solar projects, particularly in cost-sensitive markets like community solar or rural installations. Higher costs also extend the payback period for solar energy systems, reducing their financial appeal to homeowners and businesses. For utility-scale projects, even a modest cost increase can make the difference between a project being financially viable or shelved, leading to a slowdown in large-scale renewable energy deployment.

• Supply Chain Disruptions: A trade war could exacerbate already-strained global supply chains, leading to project delays and material shortages. The U.S. solar industry heavily depends on solar panels and components from Southeast Asia, which account for over 80% of imports. Tariffs targeting these regions would force developers to seek alternative suppliers, which may not have the capacity or capability to meet demand. Additionally, domestic production in the U.S. currently cannot scale quickly enough to fill this gap, creating bottlenecks that could last for years. These disruptions would not only delay new projects but also increase costs as suppliers pass on higher tariffs and logistical expenses to end-users.

• Global Market Dynamics: A prolonged trade war could shift global solar market dynamics, with countries like China solidifying their dominance as key exporters to other regions while the U.S. solar industry faces stunted growth. As nations compete for renewable energy leadership, the U.S. risks falling behind due to higher costs and reduced access to essential components. Countries with strong domestic manufacturing capabilities, like Germany, or those actively building solar supply chains, like India, could benefit from these shifts, gaining competitive advantages in the global renewable energy market.

• Environmental Consequences: Slower adoption of solar energy due to increased costs and delayed projects could hinder progress toward U.S. climate goals. Renewable energy is a key part of the strategy to reduce greenhouse gas emissions and transition away from fossil fuels. Any reduction in solar deployment would lead to continued reliance on traditional energy sources, increasing carbon emissions and jeopardizing international climate commitments like those under the Paris Agreement.

How Solar Tariffs Could Impact Consumers

Solar tariffs have a direct impact on consumers by increasing the cost of solar installations, delaying financial benefits, and limiting access to renewable energy. These effects ripple through the solar adoption process, from the price of materials to the return on investment (ROI) timeline. Tariffs disproportionately affect middle- and low-income households, creating barriers to clean energy access and undermining efforts to democratize solar power.

• Higher Costs: Solar tariffs raise the cost of imported panels and related equipment, which directly affects the overall price of solar installations. According to Inside Climate News, tariffs implemented during Trump’s administration increased the price of panels by as much as 30%. This cost increase translates to thousands of additional dollars for residential solar systems and even higher expenses for commercial and utility-scale projects. For middle- and low-income households, these added costs create significant financial barriers, limiting access to solar energy despite the availability of federal incentives like the solar tax credit (ITC).

• Longer ROI Timelines: Higher upfront costs caused by tariffs extend the payback period for solar investments, making them less attractive to cost-conscious consumers. For a typical residential solar system, the ROI period may increase by 2-3 years due to higher panel prices, according to estimates by the Solar Energy Industries Association (SEIA). This longer timeline could deter homeowners who are already hesitant about the significant initial investment required for solar installations. Furthermore, businesses considering solar as a cost-saving measure may delay adoption due to concerns over diminished financial returns.

• Reduced Accessibility for Marginalized Communities: Tariffs disproportionately impact marginalized communities by raising the financial barriers to entry for solar energy. A study by the National Renewable Energy Laboratory (NREL) found that middle- and low-income households are already underrepresented in solar adoption due to financial constraints. Tariffs exacerbate this disparity, limiting the potential for solar energy to address energy equity and reduce electricity costs in underserved areas.

• Impact on Solar Financing: For many homeowners and businesses, solar adoption relies on financing options such as solar loans, leases, or power purchase agreements (PPAs). Tariffs increase equipment costs, which can lead to higher loan amounts and monthly payments, reducing the affordability of solar financing. Additionally, increased project costs may make some financing options, particularly for small-scale projects, less viable for financial institutions, further restricting access for consumers.

Should You Install Solar Panels Before Trump Policy Changes?

As the possibility of expanded tariffs and policy changes under a second Trump administration looms, homeowners and businesses face a critical decision: invest in solar now or wait for clearer policy outcomes. Current federal incentives, paired with the potential for rising costs due to trade restrictions, strongly favor early adoption of solar energy. Acting now can help homeowners and businesses secure the financial benefits of solar energy before potential changes increase costs or reduce accessibility.

• Incentives Favor Early Adoption: The federal solar tax credit (ITC) provides a 30% tax credit for residential and commercial solar installations completed through at least 2032. This credit significantly reduces the upfront cost of solar systems, making installations more affordable for homeowners and businesses alike. For example, a $20,000 solar system could qualify for a $6,000 credit, lowering the effective cost to $14,000. The long-term stability of the ITC, coupled with additional state and local rebates in many regions, provides a unique opportunity to maximize savings. Waiting for potential policy changes could lead to missed opportunities to lock in these incentives, especially if further tariffs increase equipment costs.

• Avoiding Cost Increases: Expanded tariffs proposed by Trump could raise the cost of solar panels and associated components such as inverters and batteries. Previous tariffs increased solar panel costs by up to 30%, and future tariffs could have similar effects. By investing in solar now, homeowners and businesses can lock in current prices and avoid potential cost hikes. Additionally, securing financing for solar installations before policy changes may help mitigate long-term expenses, as financing terms are often more favorable when installation costs are lower.

• Maximizing Long-Term Benefits: Solar energy provides significant long-term savings by reducing monthly electricity bills and offering protection against rising utility rates. By acting now, homeowners and businesses can start benefiting from these savings sooner, shortening the payback period for their investment. The combination of federal incentives, cost certainty, and long-term energy savings makes early adoption a financially sound decision. Most residential solar systems pay for themselves within 6-8 years, with additional savings accruing over the system’s 25-30 year lifespan.