Key Takeaways
President Trump imposed a 15% tariff and a minimum price on imports of polysilicon-based products used in solar panels and semiconductor chips after a national security review.
China has a virtual monopoly on polysilicon, producing it with cheap coal power and forced labor, as much of the product comes from areas in China where Uyghurs are repressed.
China also dominates the solar panel supply chain, often exporting them through other Asian countries to avoid U.S. tariffs.
President Trump’s goal is to shore up production in the United States—industries that slumped once China flooded the market with lower-cost supplies.
The trade protections take effect on December 4, leaving U.S. manufacturers concerned that delayed implementation could lead to an increase in imports.
Companies that have been buying Chinese solar panels have argued that the delay is needed to adjust supply contracts to higher prices.
On August 6, President Trump imposed a series of price floors and a 15% tariff on products made from polysilicon, the raw material used in semiconductors and solar panels that are primarily produced by China. The administration used Section 232 of the Trade Expansion Act of 1962 to implement rules supporting domestic chip and solar supply chains needed to compete with China in artificial intelligence and energy. The Section 232 tariff will replace a narrower tariff on solar cells and modules that expired in February and dates back to President Trump’s first term.
The trade protections will take effect on December 4, which has U.S. manufacturers concerned that the delayed implementation could lead to increased imports in the coming months. Companies that buy solar panels have argued that the delay is needed to adjust supply contracts to higher prices. The price floors and tariffs are justified with a national security investigation into the overseas production of the material.
China dominates the supply chain and uses cheap coal power and forced labor by Muslim Uyghurs in the Xinjiang region to produce polysilicon — an ultra-pure form of silicon. According to the International Energy Agency, “based on manufacturing capacity under construction, China’s share of global polysilicon, ingot and wafer production will soon reach almost 95%.” To make solar panels, cylinders of polysilicon called ingots are sliced into wafers, which are combined to create solar cells and then assembled into modules that generate electricity. Companies with U.S. solar factories include T1 Energy, First Solar and Qcells, the U.S. solar arm of South Korea’s Hanwha. In addition to its Texas solar panel plant, T1 is investing $510 million in a cell factory. Domestic solar and chip manufacturers have wanted tariffs to protect their U.S. factories from cheap Chinese products, often sold through other Asian countries to avoid direct tariffs on Chinese goods.
The minimum prices for solar components are designed to prevent importing products priced below the price floor. Companies must certify that the first sale of any imported polysilicon and solar components to another company will not fall below the minimum import price. The minimum import prices are $21 per kilogram of polysilicon, $100 per kilogram of solar ingots and wafers, 22 cents per watt of solar cells, and 38 cents per watt of solar modules. (A kilogram is equal to about 2.2 pounds.) The Commerce Secretary may adjust minimum import prices based on market conditions or other factors affecting the fair market value of the covered products.
For covered products from Japan, South Korea, Taiwan, Switzerland, Liechtenstein, and European Union members, the combined total of the new duty and existing levies is 15%. Covered products from the United Kingdom have a 10% tariff.
Semiconductors are not subject to the polysilicon tariffs, as the Commerce Department has separate Section 232 tariff actions on certain semiconductors. In January, President Trump signed a proclamation that imposed a 25% tariff on a narrow range of semiconductor imports, primarily advanced computing chips. The tariffs do not apply to chips imported to support the buildout of the U.S. technology supply chain or to bolster domestic manufacturing capacity for semiconductor derivatives.
The United States has two polysilicon factories. Hemlock Semiconductor, which operates a plant in Michigan, is a joint venture between Corning and Japan’s Shin-Etsu Handotai. Munich-based Wacker Chemie runs a factory in Tennessee. The U.S. share of global polysilicon production has fallen from 50% in 2005 to less than 2% in 2024 due to cheap imports. The chip industry accounts for 2.4% of global polysilicon demand, according to the Semiconductor Industry Association.
Companies that commit to building manufacturing facilities in the United States can apply for exemptions from the levies. The Commerce Department is authorized to create an incentive program for companies that invest in factories to produce polysilicon or its derivatives.
Conclusion
President Trump imposed a 15% tariff and minimum price on imports of products made from polysilicon used in solar panels and semiconductor chips after a national security review. China dominates polysilicon production, using cheap coal power and forced labor. China also dominates the solar panel supply chain, often exporting them through other Asian countries to avoid U.S. tariffs. The trade protections take effect on December 4, which has U.S. manufacturers concerned that the delayed implementation could lead to an increase in imports, but companies that buy solar panels have argued that the delay is needed to adjust supply contracts to higher prices.
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