[Market Trend] U.S. Tariffs Reshape China's Green Tech Supply Chain, Solar & Storage Most Affected

DIGITIMES Observation: Tariff Uncertainty Under Trump Impacting China's Green Energy Supply Chain

According to DIGITIMES, the tariff policy shifts under former President Donald Trump have caused substantial disruptions to China's green energy product supply chain, despite energy and energy-related products being theoretically exempt under the reciprocal tariff framework. The impact is particularly significant in solar and battery sectors, where Chinese companies hold dominant production capacities.

Solar Products: U.S. Tariffs Target Southeast Asia Transshipment

To prevent Chinese solar products from being rerouted through Southeast Asian countries—a practice known as transshipment—the U.S. is imposing steep tariffs on solar imports from Cambodia, Thailand, Vietnam, and Malaysia. This move is expected to reshape the industrial layout of Chinese solar companies in Southeast Asia. In response, Chinese firms are actively adjusting their global capacity allocation by boosting U.S. local production, reducing capacity in affected Southeast Asian countries, and expanding into other international markets.

DIGITIMES notes that this will likely trigger a second wave of production relocation among Chinese solar companies. Existing production hubs in Malaysia, Vietnam, and Thailand may shift to Southeast Asian countries not subject to U.S. tariffs, such as Indonesia and Laos, or even expand into emerging overseas markets to diversify supply chain risks.

Battery Sector: Tariff Surge Spurs Strategic Realignment

In the battery segment, the U.S. has imposed a staggering 173.4% tariff on Chinese energy storage batteries, which was temporarily reduced to 40.9% in May. Still, this remains significantly higher than the 32% reciprocal tariff rate applied to Taiwanese products (currently paused, with a provisional 10% rate).

Chinese battery suppliers are adopting one of two main strategies:

1. Localizing production within the U.S. to bypass tariff barriers.

2. Strategically pausing entry into the U.S. market altogether.

   
   

If Chinese storage battery exports continue to face high U.S. tariffs, this will raise export costs, erode price competitiveness, and inevitably prompt the U.S. market to accelerate its shift toward Non Chinese suppliers. This scenario could present opportunities for Taiwanese and South Korean companies to absorb redirected orders.

Broader Implications: Rising Costs, Slower Energy Transition

Overall, U.S. tariffs are expected to increase market prices for green energy products, which could undermine the development of renewable energy projects in the U.S. and slow down the pace of energy transition.

Beyond tariffs, the potential second Trump administration's broader impact on the global green energy industry remains uncertain. Analysts are closely watching how Trump 2.0 might affect the Inflation Reduction Act (IRA) — particularly any temporary suspension of green subsidies and the final outcome of Congressional review in the House and Senate.

Source of Information: Twlo TA