According to a report by Reuters, major Chinese-owned solar factories in Vietnam are scaling back production and reducing their workforce in response to the expansion of U.S. trade tariffs affecting Vietnam and three other Southeast Asian nations. Meanwhile, new Chinese-owned solar plants are emerging in Indonesia and Laos, avoiding U.S. trade protections and boasting enough planned capacity to supply roughly half of the solar panels installed in the U.S. last year.
Chinese solar manufacturers have consistently decreased operations in their existing hubs while constructing new facilities in other countries, enabling them to circumvent tariffs and maintain a strong presence in both U.S. and global markets despite multiple waves of U.S. tariffs aimed at limiting their growth.
While the relocation of Chinese solar manufacturing has been ongoing, the extent of the current shift to Indonesia and Laos has not been previously reported. This article includes insights from over a dozen individuals across five countries, including employees at Chinese plants, officials from non-Chinese solar companies, and legal experts.
William A. Reinsch, a senior adviser at the Center for Strategic and International Studies and a former trade official in the Clinton administration, described the situation as “a huge cat and mouse game,” noting the ease with which manufacturers can relocate to avoid tariffs.
China now accounts for approximately 80% of global solar shipments, while its export hubs in Asia contribute significantly to the remainder. This is a stark contrast from two decades ago when the U.S. led globally in the solar industry. U.S. solar imports have tripled since the implementation of tariffs in 2012, reaching a record $15 billion last year. While direct imports from China in 2023 were minimal, around 80% originated from Vietnam, Thailand, Malaysia, and Cambodia, where Chinese-owned factories operate.
Following complaints from U.S. manufacturers, tariffs on solar exports from these four Southeast Asian nations were imposed last year and expanded in October. Over the past 18 months, at least four Chinese or China-linked projects have commenced operations in Indonesia and Laos, with another two announced, collectively equaling 22.9 gigawatts (GW) in solar cell or panel capacity.
A substantial portion of this production is destined for the United States, the world’s second-largest solar market after China, where prices have averaged 40% higher than those in China over the last four years.
U.S. solar producers have consistently filed trade complaints, asserting that they cannot compete with affordable Chinese products subsidized by the Chinese government and other Asian countries. Chinese manufacturers counter these claims by citing their technological expertise as a reason for their competitive pricing.
Tariffs have become a prominent topic in the U.S. election. Former President Donald Trump, a Republican, has proposed tariffs on all U.S. imports to boost domestic manufacturing, while his Democratic rival, Vice President Kamala Harris, argues that Trump’s plan would increase costs for U.S. consumers. Nonetheless, lawmakers from both parties support tougher tariffs on China’s solar exports to foster a domestic supply chain.
Republican Congressman John Moolenaar, Chairman of the House Select Committee on China, emphasized the need for stricter enforcement of tariffs to prevent China’s circumvention via third countries. The U.S. Department of Commerce, the White House, and China’s commerce ministry have not provided comments.
In Vietnam, the effects of new U.S. tariffs, which have led to duties exceeding 300% for some producers, are particularly pronounced. During a visit to northern Vietnam industrial parks in August, Reuters observed layoffs at factories owned by companies like Longi and Trina Solar. In Bac Giang province, hundreds of workers at Longi Green Energy Technology’s Vinasolar unit lost their jobs, with only one of nine production lines in use. Trina Solar idled one of its two factories producing solar cells and panels in Thai Nguyen province.
Longi did not respond to Reuters’ requests for comment, though it earlier stated a suspension of output at a Vietnamese plant. Trina declined to comment but had noted maintenance shutdowns in Vietnam and Thailand.
Despite an almost 74% increase in U.S. solar imports from Vietnam through August, industry analysts attribute this surge to exporters seeking to bypass this year’s U.S. tariffs.
Chinese solar firms are gravitating towards Indonesia, driven by the tariffs imposed on Vietnam. Notable projects include Thornova Solar’s plant with a 2.5 GW annual capacity, a new 1 GW Trina plant, and China Lesso Group’s 2.4 GW facility. New East Solar also announced a 3.5 GW plant in Indonesia last year.
The shift to Indonesian production has been rapid, as confirmed by a U.S. solar firm manager who noted a surge in large orders from Chinese firms. Solar exports from Indonesia to the U.S. nearly doubled to $246 million through August 2024.
In Laos, firms like Imperial Star Solar and SolarSpace have established production facilities, further diversifying production bases. JinkoSolar announced a partnership to build a 10 GW plant in Saudi Arabia.
Chinese firms are also accelerating the construction of U.S. manufacturing plants, incentivized by U.S. measures. Chinese companies are expected to have 20 GW of annual solar panel production capacity in the U.S. within the next year, enough to meet about half of the U.S. market demand.
