Solar US tariffs could drive Asia transition 2025-2026
BANGKOK: Experts suggest that the significant tariffs the US intends to impose on solar panels produced in Southeast Asia could provide an opportunity for the region to expedite its long-delayed transition to renewable energy.
Earlier this month, the U.S. government revealed plans to impose steep tariffs on solar panels manufactured in Cambodia, Vietnam, Thailand, and Malaysia.
These proposed duties come in the wake of a probe-initiated prior to Donald Trump’s presidency-into what were described as “unfair practices” in these nations, focusing on companies headquartered in China.
If given the green light next month, the new tariffs would add to those already enforced during the Trump administration, which includes a general 10 percent duty for most countries and a 145 percent tariff specifically targeting products made in China.
Solar Panel Production
The impact on the U.S. market is expected to be significant. China is responsible for approximately 80 percent of global solar panel production and maintains a leading position across all stages of the manufacturing process.
According to Putra Adhiguna, managing director of the Energy Shift Institute, the proposed tariffs would render exporting solar panels to the U.S. commercially unviable. In 2024, nearly 80 percent of the solar panels imported by the United States came from Southeast Asia.
Although solar manufacturing investment has increased domestically in recent years, the The U.S. market remains heavily reliant on imported components and materials.
The wave of new tariffs could spell serious trouble for Chinese solar manufacturers, who are already facing an oversupplied market domestically .
In an effort to sidestep trade penalties from the United States and the European Union-both aiming to safeguard and grow their domestic solar sectors-many of these companies relocated production to Southeast Asia.
The proposed tariffs vary widely, starting at approximately 40 percent for certain Malaysian exports and soaring to an astonishing 3,521 percent for some producers based in Cambodia.
Tariffs Could Accelerate Energy Transition
However, the region may find a potential upside, according to Ben McCarron, managing director of Asia Research & Engagement. He noted that the tariffs and ongoing trade tensions could serve as a catalyst for Southeast Asia’s shift toward renewable energy.
China, he added, is likely to increase its focus on regional markets and advocate for supportive policies and implementation strategies aimed at rapidly expanding green energy adoption, largely driven by its export-oriented companies.
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Experts have repeatedly cautioned that nations in Southeast Asia are lagging in their efforts to shift away from fossil fuels, such as coal, which contribute to global warming. “At the current rate of progress, the region risks missing out on the benefits of decreasing wind and solar costs-now more affordable than fossil fuels,” energy think tank Ember stated in a report last year.
For example, in 2024, more than 80 percent of Malaysia’s electricity continued to be produced from fossil fuels.
The country has set a goal of sourcing 24 percent of its electricity from renewables by 2030, a target critics say does not align with international climate objectives. According to Ember senior energy analyst Muyi Yang, the new tariff structure presents a dual opportunity for the region.
U.S. Market Solar Industry
Up to now, Southeast Asia’s solar industry has been mostly opportunistic, focusing on exploiting local resources and labor advantages to boost exports, said Yang in an interview with AFP.
With access to the U.S. market potentially restricted, the industry could pivot toward supporting domestic clean energy transitions, accelerating renewable adoption within the region and creating a new market that might help buffer against global uncertainties.
However, replacing the scale of the U.S. market won’t be simple, especially given the early stage of renewable energy development in much of Southeast Asia.
“The key to success lies in transforming this export-driven growth into a locally rooted clean technology movement,” Yang emphasized. While considerable price cuts might draw some buyers, Adhiguna cautioned that nations in the region and beyond could be wary of an influx of solar imports.
Large economies like Indonesia and India have already implemented policies to prioritize and protect their domestic solar manufacturing industries.
“Many countries are likely to be cautious about large-scale imports, choosing instead to focus on maintaining trade balance and fostering domestic green employment,” he stated .
