Trump slaps tariffs and price floors on polysilicon to counter China

The Trump administration is trying to will a lost industry back into existence, and it has reached for two blunt instruments to do it.

A new executive order imposes both tariffs and price floors on polysilicon, the raw material behind solar panels and semiconductors alike, in an effort to claw production back from China.

The tariff is the headline measure. From early December, most imported polysilicon and its derivatives will face a 15% duty, though imports from the UK get a lower 10% rate.

The price floors are the stranger tool, and arguably the more telling one, since the order sets minimum prices of $21 a kilogram for polysilicon and $100 for ingots and wafers, along with floors for solar cells and modules.

The point of all this is to stop dumping, the practice of selling below cost to squeeze rivals out. Commerce Secretary Howard Lutnick said the goal is to set prices so Chinese producers can no longer undercut the market, with the tariffs there to push companies to build domestically instead of simply buying whatever is cheapest abroad.

The scale of what Washington is trying to reverse is stark. US polysilicon capacity fell to less than 2% of the world’s total in 2024, down from around 50% in 2005, as production migrated almost entirely to China.

Global output, meanwhile, has exploded, growing more than 270% since 2020 and overwhelmingly in China, which has left the US almost wholly dependent on a supply chain it no longer controls or even meaningfully influences.

That dependence is why the administration frames the order as a security matter rather than a purely industrial one.

Because chips built on polysilicon are essential to defence systems, it argues, a reliable domestic supply counts as a national-security priority rather than a matter of industrial policy alone.

President Trump put it more bluntly, saying the measures are about bringing chip manufacturing back to the United States in a big way and tying polysilicon to his broader reshoring push.

The move fits a familiar pattern, arriving as the latest front in a chip war escalating between the US, China and the EU, each racing to secure the materials and tools behind advanced technology.

Washington has been pulling many levers at once: it has restricted exports of chipmaking equipment and moved to ban Chinese devices in data centres, and polysilicon now adds a materials dimension to that campaign.

Beijing, for its part, warns of collateral damage, arguing that carving up the supply chain will break it for everyone.

There are real costs at home, too. Higher polysilicon prices could raise the cost of solar power in the US, an awkward side effect for an order justified partly on energy and manufacturing grounds.

Nor will the fix be quick, since new polysilicon plants take years and billions to construct, which is why the order pairs the tariffs with an incentive programme to encourage domestic building.

The solar industry may feel the squeeze first. Developers who rely on cheap imported panels could face higher costs, potentially slowing installations at a time when electricity demand, much of it from AI, is surging.

That is the awkward tension running through the policy: the same data-centre boom driving demand for power is also driving demand for solar, so tariffs meant to rebuild manufacturing could make that power more expensive in the near term.

The price floors are what make the intervention so unusual. By guaranteeing a minimum price, the government is effectively promising would-be producers that a US plant can turn a profit, an attempt to de-risk the enormous upfront investment.

Viewed that way, the order is a marker of intent as much as anything else. Whether price floors and tariffs can revive an industry that has almost disappeared remains the open question, yet the direction of US policy could hardly be clearer.