[SINGAPORE, VIETNAM, MALAYSIA] Washington has fired another shot in the clean energy trade war with South-east Asia in the crosshairs – a move that could dim the region’s standing in the global solar supply chain.
The verdict announced on Monday (Apr 21) followed a year-long investigation launched under former US president Joe Biden’s administration, after American solar manufacturers raised concerns that Chinese companies were bypassing existing tariffs by shifting production to South-east Asia.
Following final affirmative determinations, the issuance of orders is set to take place in June. These orders usually have no fixed expiration dates but are subject to mandatory five-year reviews, said Lim Jaehwan, partner at VSE Lawyers.
This could reshape investment flows, supply chains and export priorities, potentially impacting the region’s green energy goals. The Business Times provides a closer look at how the fallout could play out on the ground.
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Cambodia: The long-flashing warning lights
Cambodia solar manufacturers are staring down duties as high as 3,521 per cent for several China-linked companies, in a final ruling that dwarfed preliminary estimates by up to 28 times.
But pundits tell BT that solar players had already seen the writing on the wall and began restructuring supply chains well before the other shoe dropped.
Yana Hryshko, managing consultant and head of global solar supply chain research at energy research and consultancy group Wood Mackenzie, noted that as soon as the probe began last year, industry players in Cambodia began shifting their focus elsewhere.
Some companies built new manufacturing facilities within the US, while others moved to new locations such as in the Middle East – a region Hryshko describes as having high solar potential, generous government support in terms of funding, and significant energy demand.
Many players also relocated their plants to other South-east Asian countries, such as Laos and Indonesia. Hryshko said it was “only a matter of time” before the spotlight would turn to these nations.
“We joke that the solar supply chain in South-east Asia reminds us of a board game,” said the Suzhou-based analyst. “You move to one cell and you get struck. Move to another cell and you get struck again.”
Among its neighbours, Cambodia took the most severe blow as it had withdrawn from participating in the US-led probe. Last November, Hounen Solar – the American arm of China’s Zhejiang Hounen Photoelectric – and Solar Long PV Tech Cambodia, the hardest-hit companies, said they were not able to dedicate resources to the investigation.
When asked what the tariffs mean for the kingdom’s solar scene, Hryshko said: “It means nothing… No one was going to supply from Cambodia anymore, anyway.”
While she acknowledged that the final levy was stiff, she noted: “At this point in time, it’s hard for me to be surprised… People already adjusted their supply chains to mitigate the risk.”
Vietnam: Cracks were already showing
Among the four nations slapped with the new US duties, Vietnam exported the largest volume of solar cells to America in 2023 – 12.3 gigawatts (GW) – with export value trebling since 2021 to reach US$4 billion.
Vietnam’s solar space is dominated by foreign-owned companies, with limited participation from domestic firms. Shanghai-headquartered Jinko Solar – one of the largest international players in the market – faces a firm-specific US duty of around 245 per cent on its exports from Vietnam.
The company’s photovoltaic cell factory in Vietnam began operations in October 2023 with a peak capacity of 8 GW, aimed at the US and European Union markets. But industry sources told BT the company has since slashed both its workforce and output in Vietnam due to the US tariffs.
Earlier this year, First Solar – a leading American solar technology company – also decided to scale back production in Vietnam and Malaysia by a combined 1 GW, citing the uncertain US policy environment as a key reason.
“Since late 2024, a wave of solar cell manufacturers have been shutting down operations in Vietnam,” said Do Quang Thinh, founder and chief executive of The Sunergy, a Vietnam-based renewable energy consultancy.
He noted that smaller manufacturers have ventured outside of the US for their exports, or even relocated production to countries with no solar tariffs, such as Indonesia. Meanwhile, some industrial park operators are holding back on leases to these companies, citing tariff risks and potential operational instability.
Bruno Jaspaert, CEO of Deep C Industrial Zones in Hai Phong, said most previously planned large solar manufacturing projects have now stalled or shifted focus to serve markets within Asia. “That doesn’t mean they can no longer exist, as there are still other markets available and the cost setup in Vietnam is still quite interesting for them,” he said.
Given the rapid pace at which solar companies set up operations in South-east Asia – allegedly to circumvent US tariffs on Chinese production – industry watchers say the new anti-dumping and countervailing duties could partially paralyse the sector. But they are likely to have a limited effect on Vietnam’s solar power sector, given that the majority of panels used for such projects are sourced from China.
“I believe that the impact of the current trade tariffs will be much bigger… Worst-case scenario, Vietnam will be hit much harder than its surrounding countries,” Jaspaert said.
The new levies are set to come on top of the earlier broad tariffs imposed by US President Donald Trump, which have already disrupted global supply chains and markets.
Malaysia: Energy transition plan to the rescue
As US tariffs push foreign solar manufacturers out of Malaysia, the country risks losing more than 5,000 jobs and a chunk of its solar export market. Yet, industry players say the resulting oversupply could accelerate Malaysia’s energy transition.
Davis Chong, president of the Malaysian Photovoltaic Industry Association, expects more foreign companies to scale down or relocate production outside Asean due to shrinking margins. However, local players, buoyed by domestic demand and government support under the National Energy Transition Roadmap (NETR), are unlikely to be impacted.
“The persistent global oversupply suggests solar prices will stay low… That surplus could benefit South-east Asia’s local market,” he told BT.
Patrick Tay, PwC Malaysia’s economics and policy deals partner, said solar panels priced out of the US market will seek alternative destinations, including Malaysia. “This increased supply could potentially speed up our renewable energy transition,” he added.
Although Malaysia alone may not be able to absorb all domestically produced supply in the long-run, the intra-Asean market is sizeable and could support industry players in the region, he said.
“Every megawatt that a South-east Asian country can install acts as a natural hedge against fluctuating fossil fuel commodity costs, which are US dollar-denominated, (and) would serve as a buffer against any global inflationary policies.”
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Grant Hauber, strategic energy finance adviser for Asia at the Institute for Energy Economics and Financial Analysis
NETR outlines Malaysia’s goal of net-zero emissions by 2050, with renewables making up 70 per cent of electricity generation – 58 per cent of which will come from solar.
Despite export headwinds, Chong said the long-term outlook for the domestic sector remains positive as the energy transition plan could create 300,000 jobs by 2050, driven largely by solar deployment.
Chinese companies currently dominate Malaysia’s solar manufacturing, accounting for 80 per cent of its 23.6 GW capacity. Most of this is exported to the US, with the South-east Asian country’s domestic installed capacity at only 4.2 GW.
Thailand: Greener pastures inwards
As the second-largest solar panel exporter and the third-largest solar cell exporter to the US by volume, Thailand is hit hard by tariffs totalling almost 1,000 per cent following Monday’s ruling.
But industry players note that displaced demand from the US opens the door to expanding the domestic use of solar products in Thailand and scaling up the regional sale of power across Asean member nations.
Grant Hauber, strategic energy finance adviser for Asia at the Institute for Energy Economics and Financial Analysis, said: “This would be advantageous for energy supply diversification, given Thailand’s high dependency on natural gas (70 per cent of demand) with high exposure to global gas prices.”
The energy veteran pointed out that Thailand has only about 3.3 GW of solar installed in 2024, or about 3.9 per cent of electricity supplied.
“Solar power is by far the cheapest source of energy (that) represents a one-time, upfront purchase cost with almost zero ongoing cost when operating,” he explained.
“As such, every megawatt that a South-east Asian country can install acts as a natural hedge against fluctuating fossil fuel commodity costs, which are US dollar-denominated, (and) would serve as a buffer against any global inflationary policies.”
Beyond domestic markets, opportunities lie in the regional sale of solar products within the Asean bloc as well, added Hauber, who noted that almost every member state has large renewable energy targets over the next two decades.
“The region could serve as a destination market for solar manufacturing output not exported to the US, preserving plant investments and jobs.”
