An alliance of American solar manufacturers is seeking hefty tariffs against several Southeast Asian countries, alleging that Vietnam, Thailand, Malaysia, and Cambodia are unfairly dumping solar cells in the United States.

The US Commerce Department (DOC) on April 24 received the request for investigation and could decide to initiate a probe within the next several weeks. It's the latest sign of growing trade tensions as a global boom in solar energy fuels competition.

The move centers on allegations of both anti-dumping and anti-subsidy trade practices. Anti-dumping refers to selling goods at below-market prices to gain market share, while anti-subsidy accusations mean companies have benefited from unfair government support to lower their costs.

This case against the four Southeast Asian countries rests on the argument that Vietnam, in particular, serves as a hub for Chinese solar manufacturers to circumvent existing tariffs against China.

Growing US reliance, then backlash

The US has increasingly turned to imported solar batteries and components in recent years, driven by climate legislation favoring the growth of green energy.

Imports of solar cells from Vietnam jumped to $4.2 billion in 2023 and the country now comprises 26% of all US solar battery imports, according to US Customs data cited in the complaint.

If the DOC initiates a formal investigation, Vietnam could face the highest proposed anti-dumping margins of the four countries at 271.45%. The plaintiff, the US Solar Energy Manufacturing Trade Commission Alliance, has named approximately 60 Vietnamese solar firms in their complaint.

American manufacturers allege that Vietnamese solar cell enterprises benefit from 31 unfair subsidy programs from the Vietnamese government, including preferential lending and export guarantees with interest rates, tax incentives, land incentives, export promotion grants, and preferential pricing for utilities such as electricity or water.

Transnational subsidy accusations

The complexity of solar cell supply chains, often involving significant Chinese investment in Southeast Asia, has fueled an additional, novel line of argument.

The American manufacturers' alliance contends that Vietnamese firms benefit from "cross-border subsidies" from the Chinese government under the One Belt – One Road Initiative. While still a developing area of trade investigation, such allegations signal a tougher approach to global trade flows.

The context of wider trade tensions

This case could mark a major escalation in trade tensions surrounding critical green energy technologies. The US government has implemented various subsidies and credits, such as those within the Inflation Reduction Act, to try and stimulate domestic production of solar cells and other components.

These efforts sit atop existing anti-dumping and anti-subsidy taxes already applied to China, which Vietnam-based exporters are currently able to sidestep. This latest trade complaint underscores rising American protectionism in a sector deemed vital to both climate goals and high-tech competition.

However, the potential economic fallout could be significant. US solar developers have come to rely heavily on affordable imports from Southeast Asia to fuel growth in large-scale and rooftop solar installations. If the US imposes steep tariffs, costs rise and projects could become unviable, slowing the American solar boom just as it is gaining critical momentum.

Vietnam's Response

The Vietnamese government and solar manufacturers have so far not issued detailed responses to the trade case. Vietnam's Trade Defense Agency has offered preliminary guidance to solar businesses, urging them to monitor the case and develop plans for how they would contest any probe by the US Department of Commerce.

The Trade Defense Agency also emphasized that exporters must fully cooperate with any US investigation or risk facing the most severe penalties.

What to watch for

The US Department of Commerce will likely decide within the next few weeks whether to initiate a formal anti-dumping and anti-subsidy investigation.

If it goes forward, the investigation would take at least several months to determine preliminary tariffs, with the full process sometimes taking over a year. Should significant tariffs be implemented, legal challenges are likely.

The economic impact could reverberate across Southeast Asia as solar investment decisions are put on hold, while the case itself offers a barometer of how the United States will balance climate policy against industrial policy and the risk of rising energy costs.