Section 232 tariffs push U.S. module prices to 2023 levels, but analysts see a path back to $0.30/W

The recent Section 232 trade action taken by the Trump Administration to impose tariffs and minimum import prices on silicon products will dramatically reshape domestic solar procurement, making U.S. module assembly using imported cells the de facto industry standard and offering the greatest benefits to vertically-integrated companies, according to clean energy advisory firm Intertek CEA. 

Speaking during a recent webinar, Intertek CEA policy research manager Christian Roselund and associate director for market intelligence Joseph C. Johnson detailed the regulatory and market consequences of the trade action.

The Section 232 action, which was announced August 6 and takes effect December 4, 2026, establishes a two-pronged tariff scheme, requiring imports entering the United States on or after the effective date to meet a minimum import price (MIP) at the time of their first arm’s-length sale while also paying a 15% ad valorem tariff on the entered value.

The MIPs are set at 38 cents per watt for modules and 22 cents per watt for cells, and the Intertek analysts translated the weight-based benchmarks for upstream materials to their cost-per-watt equivalents: 3.7 cents for polysilicon, and 12 cents for ingots and wafers.

The fact that the MIPs stack with the ad valorem 15% tariff and existing Section 301 tariffs of between 10 and 12.5 percent has led spot pricing for imported and domestic modules to increase to roughly 46 cents per watt. 

Johnson noted that the market last saw similar prices during the reaction to the Southeast Asian anti-circumvention inquiry in 2022 and 2023. However, he predicted that prices for modules assembled in the U.S. using imported cells will eventually settle around a floor of 30 cents per watt in the future as the market adapts.

The path back to 30-cent modules

The Intertek CEA analysts say the primary effect of the Section 232 tariffs will be the effective elimination of solar module imports to the U.S., with simple economics driving buyers toward domestically-assembled modules.

“We’re expecting domestic module assembly to start to dominate the market in 2027,” said Roselund, but he also noted that existing vertically integrated companies would have the easiest time selling into the new domestic market.

“Vertically integrated companies can afford to sell at these inflated minimum import prices and pocket the margin,” he said. “Say, if you’re a company that makes cells and modules and you make cells overseas, you sell in at 22 cents a watt, you can have your modules produced at a lower cost because you’ve made the profit on the cell side. And the higher the degree of vertical integration, the more benefit this has.”

On the other side of the coin, domestic companies that only assemble modules face higher cell prices from suppliers both foreign and domestic. And while domestic cell manufacturers might benefit from the higher prices they can charge as volatility drives higher prices, they will eventually face a hit to their profitability due to the cost of imported silicon wafers.

The potential benefits to vertically-integrated companies may not be enough to drive new investment in stateside processing of polysilicon and manufacturing of silicon ingots, wafers and cells. Johnson noted that an uncertain environment when it comes to potential changes in policy is likely to stifle that kind of growth. 

“Given all of the unknowns [around the future of the tariffs and U.S. trade policy], it is very difficult to commit to a multi-year, hundreds of millions of dollars of new capex spend on a PV facility that could continue to face a lot of policy turmoil,” he said. “It’s very difficult for manufacturers to expand in that type of environment when there are so many unknowns about how many projects might still continue to get built out into the future. What is clear, though, is there is going to be a lot of module assembly for developers to take advantage of.”

Johnson went on to lay out one potential path to profitable domestic module assembly that doesn’t rely on vertical integration. He envisioned a framework under which a foreign cell manufacturer sells its products to module assemblers in the U.S. market above the MIP, then pays those assemblers to process the cells into modules (for which the latter company would earn Section 45X tax credits) and then agrees to buy the modules back from the assembler at a prearranged price that guarantees a small margin for the assembler, before eventually selling the modules into the market at a slight markup. 

In this way, the cell supplier makes money on the initial sale of the cells and on the modules, the assembler ensures revenue from the cell supplier and earns a profit through its assembly operations, and the market buyers get domestically-assembled modules at prices below the imported module MIP.

With U.S. module assembly capacity trending toward double the projected annual PV installation volume in the United States by the end of 2027, Johnson says these companies will have to turn to creative solutions like these to survive in a highly-competitive market. 

“Having a decent amount of excess module capacity is always good,” Johnson said. “As a module maker, you want to be able to respond to seasonality, to rush orders that let you capture maybe higher prices on a desperate customer… But when you start to get to multiples of demand — you know, 2x the amount of US demand as module capacity — that’s typically when we start to expect more competitive forces to work.”

The effects of these kinds of market forces may still be years off, though. The analysts expect additional regulations to come from the Commerce Department within the next few months, followed by delays on imports as U.S. Customs undertakes a significant expansion of its role and authority in this area. 

“As we saw with UFLPA [The Uyghur Forced Labor Prevention Act], even the product that got cleared took time to get cleared,” Roselund said. “This can mean delays on imports. Unfortunately, that’s kind of the best-case scenario.”

The full Intertek CEA webinar on Section 232 policy and market impacts can be viewed now on the firm’s YouTube channel.