US Solar Struggles to Decouple from China as Section 232 Tariffs Loom
New US Commerce Department rules imposing minimum prices and tariffs on imported solar cells take effect in December. While Texas-based T1 Energy accelerates its shift toward domestic manufacturing, rising costs have already led to the cancellation of at least 1 gigawatt of solar projects, stalling industry growth.
Washington aims to sever US solar firms' reliance on China, but the process proves more complex than anticipated. In December, new Commerce Department rules under Section 232 will require panel manufacturers to pay a fixed minimum price and a tariff of up to 15% for imported cells and certain specialized components. These measures are designed to end years of cat-and-mouse games where Chinese makers shifted factories across Asia and Africa to dodge US tariffs.
Texas-based T1 Energy is navigating this shift. CEO Daniel Barcelo stated that the rules "will really level the playing field" against rivals. However, the resulting price hikes have caused panic among installers. According to research firm Anza, at least 1 gigawatt worth of large-scale solar projects has been cancelled in recent months due to Section 232-related price adjustments.
T1 itself was born from these trade wars. After abandoning an EV battery plan due to Chinese competition and US incentives, Barcelo acquired a Dallas factory from Chinese giant Trina Solar for $621 million in December 2024. Despite Trina dropping its stake, T1 remains deeply tied to Chinese technology: Trina is its anchor customer, buying 1 GW of panels annually; specialized glass comes from Zhejiang; and equipment maintenance relies on Chinese contractors.
Although the US imports almost no core components directly from China now, a full divorce remains elusive. T1 is building its own cell factory based on technology first developed for Chinese firms and awaits Commerce waivers to avoid penalties during its onshoring transition. Wood Mackenzie analyst Elissa Pierce noted that over 40% of the current 66 GW of operational US module capacity originated from facilities owned by Chinese manufacturers or joint ventures.