Key Takeaways

• The U.S. plans significant tariffs on solar panels from Southeast Asia due to concerns over unfair practices.
• China dominates solar panel production, controlling 80% of the global supply and manufacturing stages.
• Experts believe the tariffs may accelerate energy transitions in Southeast Asia, urging a shift towards renewable energy sources.

China produces eight out of every ten solar panels globally and controls 80 percent of the manufacturing process. Recently, the U.S. announced its intention to impose significant duties on solar panels imported from Cambodia, Vietnam, Thailand, and Malaysia. This initiative follows an investigation initiated before the Trump administration, focusing on “unfair practices” primarily involving Chinese firms.

If the new tariffs are approved, they could severely impact U.S. solar panel imports, which have heavily relied on Southeast Asian manufacturers. In 2024, these countries accounted for nearly 80 percent of U.S. solar panel imports. The consequences for Chinese manufacturers, who have extended operations into Southeast Asia to circumvent existing tariffs, could be disastrous. New tariffs could range from approximately 40 percent for Malaysian products to a staggering 3,521 percent for certain Cambodian exports.

While these measures could effectively eliminate the commercial viability of solar exports to the U.S., experts see potential benefits for the Southeast Asian market. Ben McCarron from Asia Research & Engagement suggests that the tariffs may act as a catalyst for accelerating energy transitions in the region. China may enhance its efforts to enable faster green energy adoption in Southeast Asia, thus promoting regional markets.

The slower-than-desired pace of renewable energy development in Southeast Asia raises concerns. According to energy think tank Ember, the region must adapt quickly to avoid missing opportunities presented by declining wind and solar costs, now more affordable than fossil fuels. For instance, Malaysia derived over 80 percent of its electricity from fossil fuels in the last year, setting a target for 24 percent renewable energy by 2030, criticized for being misaligned with global climate goals.

The new tariff situation presents a dual opportunity for Southeast Asia. As the local solar industry has been opportunistic, focusing on export potential, the cut-off from the U.S. market may incentivize a focus on internal energy transitions. Muyi Yang, senior energy analyst at Ember, emphasizes the need to transform the current export-driven momentum into a homegrown clean technology revolution.

However, the transition will not be straightforward given the size of the U.S. market and the relatively unestablished renewable energy sector in Southeast Asia. Some countries, including Indonesia and India, have systems favoring domestic solar production, which may hinder massive solar imports due to conservation goals and local job creation. The challenge remains to balance domestic energy needs with the potential opportunities arising from international market changes.

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