Amid the global rush toward clean energy transition, the U.S. solar sector is mired in a “double standards” dilemma shaped by tariff barriers and domestic subsidies. While Washington escalates trade protections through tariffs and import restrictions, it simultaneously deploys generous subsidies under the Inflation Reduction Act (IRA) to bolster local manufacturing. Yet this strategy of “tariffs with one hand, subsidies with the other” is sparking controversies over overcapacity, international rule-breaking, and long-term industry sustainability.
Tariffs and Subsidies as a Double-Edged Sword
The U.S. has doubled down on tariffs, raising duties on Chinese-made solar-grade polysilicon and wafers to 50% from January 2025. Simultaneously, it has launched anti-dumping and countervailing duty investigations into crystalline silicon photovoltaic cells from Cambodia, Malaysia, Thailand, and Vietnam, targeting alleged circumvention of Chinese products. Complementing these barriers, the IRA offers 30% investment tax credits and $10 billion in manufacturing subsidies, fueling a local production surge. First Solar, a beneficiary, saw its Q2 2025 net profit soar 446.6% year-on-year—though 79% stemmed directly from government subsidies, raising questions about its market competitiveness. Despite component capacity surging 190% to 42.1GW in 2024, the U.S. remains heavily reliant on imports, with a mere 2% self-sufficiency in cell production and a 37GW cell supply gap in Q1 2025.
WTO Probe and Global Pushback
The U.S. faces scrutiny over its “domestic content” subsidy clauses, which mandate a portion of U.S.-made components in solar projects—a potential violation of WTO national treatment principles. A WTO panel has initiated compliance reviews, with potential retaliatory measures looming if violations are confirmed. China, in response, extended countervailing duties up to 2.1% on U.S. polysilicon imports from mid-January 2025, escalating Sino-U.S. solar trade tensions.
Market Distortions and Long-Term Risks
Critics argue the policies distort market dynamics. While tariffs have inflated U.S. solar system costs by 15-20%, delaying project payback periods, subsidies have bred dependency. First Solar’s profit structure exemplifies concerns over sustainability, while IRA preferences for thin-film versus silicon technologies spark debates about technological neutrality. Structural imbalances persist: despite capacity expansion, the U.S. lacks upstream supply chain integration, undermining its energy transition goals.
Recent Developments and Outlook
A potential thaw emerged in May 2025 when the U.S. and China reached a tariff agreement, reducing levies on Chinese goods—including solar products—from 91% to 10%. Meanwhile, global solar innovation accelerates, with cost reductions in perovskite and HJT batteries offering breakthrough potential. Chinese firms are diversifying production hubs to Southeast Asia and the Middle East to circumvent trade barriers, reshaping global supply chains.
The U.S. solar sector stands at a crossroads between protectionism and open competition. While tariffs and subsidies may offer short-term gains, long-term viability hinges on technological innovation and global collaboration. Balancing these priorities will determine whether the industry escapes its current dilemma.
