The U.S. solar industry is confronting a pivotal moment. A tightening web of tariffs, foreign entity restrictions (FEOC), and continued Chinese dominance are straining the supply chain and threatening the viability of domestic manufacturing, according to a new report by energy consultancy Wood Mackenzie.

Following June's final ruling on anti-dumping and countervailing duties (AD/CVD) against Cambodia, Malaysia, Thailand, and Vietnam, tariff rates now range from 41.08% to a staggering 660.04%—exceeding even those imposed on China. These measures have created serious supply chain disruptions, price hikes, and forced a new wave of geographic repositioning.

“Despite billions spent on tariffs and years of diversification, Chinese companies still control the supply chain through regional subsidiaries,” said Elissa Pierce, solar module technology and markets analyst at Wood Mackenzie. “We’re paying more for the same supply chain risk.”

Polysilicon bottleneck: A critical threat

According to the report, a new Section 232 investigation into solar-grade polysilicon imports could present the industry's most acute vulnerability. With China controlling 95% of global production capacity, and alternative sources limited to small operations in Germany, Malaysia, and South Korea, U.S. access to this crucial material is dangerously thin.

The closure of REC Silicon’s Moses Lake facility earlier this year eliminated the only dedicated U.S. source for solar-grade polysilicon. 

“Polysilicon is the industry’s single most vulnerable link,” warned Pierce. “You can build a module factory in months, but a polysilicon facility takes years. We may not have that time.”

Desperate diversification, new frictions

Tariffs on Southeast Asian modules have raised prices 12% year-on-year, prompting U.S. companies to rapidly diversify supply toward Indonesia, Laos, and India. In Q1 2025 alone, imports from these countries surged, with their combined market share reaching 35% for modules and 18% for cells—up from just 2% and 0% respectively a year earlier.

As Wood Mackenzie highlights now, U.S. manufacturers have filed a new AD/CVD petition targeting solar cell and panel imports from those same countries. If tariffs expand further, the cost of solar deployment will continue to rise.

Domestic manufacturing at a tipping point

The One Big Beautiful Bill Act restricts access to incentives for facilities owned by foreign entities of concern. Up to 23 GW of U.S. module capacity could be disqualified under these rules. Without access to the vital 45X manufacturing tax credits, many domestic producers may be forced to shut down or restructure entirely.

Wood Mackenzie’s data shows that at the same time, inventory stockpiled in 2023 and 2024 is dwindling. Monthly imports have dropped from 5.3 GW to 2.4 GW since Q4 2024, as suppliers adjust to rising tariffs. The current buffer may only support U.S. demand through the end of this year.

MENA: A promising but delayed alternative

The analysis shows the Middle East and North Africa (MENA) region is emerging as a potential supply alternative. Tariffs on MENA-sourced modules average just 10%, compared to 26–48% for Southeast Asia and India. But most of this capacity won’t come online until late 2026 or later. And with most of it under Chinese ownership, using it could still violate FEOC rules—jeopardizing developers’ eligibility for the 45Y/48E tax credits.

Finally, Wood Mackenzie’s analysis warns that without coordinated trade policy and industrial support, the U.S. could face crippling solar supply shortages. These constraints arrive just as the country ramps up clean energy deployment to meet climate targets. “We’re at a decisive moment,” said Pierce. “If policy doesn't keep pace with the market, we risk slowing renewable energy deployment at the very moment the planet needs it most.”