US Weighs Polysilicon Tariffs, Price Floor to Bolster Chip and Solar Supply Chains

The Trump administration is preparing to set a price floor and new tariffs on imported polysilicon and related products, a move aimed at bolstering the domestic supply chain for semiconductors and solar panels, according to four people familiar with the plan. The decision, which could be announced later this month, follows a year-long national security investigation by the Commerce Department into the critical material.

Proposed Trade Measures

The administration is reportedly considering a hybrid system that combines a minimum import price with tariffs on polysilicon and its derivative products, such as silicon wafers and solar cells. This action is intended to protect U.S. polysilicon producers, including Michigan-based Hemlock Semiconductor and a Tennessee factory run by Germany's Wacker Chemie, from foreign competition.

According to two sources, the plan may include provisions allowing importers to offset the cost of the trade protections if they invest in U.S.-based wafer and cell manufacturing facilities. The measures stem from an investigation under Section 232 of the Trade Expansion Act, which permits the president to restrict imports deemed a threat to national security.

Strategic Rationale

The policy targets a foundational material for two strategic industries. Polysilicon is the ultra-pure silicon used to produce wafers for both computer chips and solar cells. While the chip industry is a key priority for the administration, it accounts for just 2.4% of global polysilicon demand, according to the Semiconductor Industry Association. The much larger demand from the solar industry is therefore essential to support a viable domestic production base for the material required by chipmakers.

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This initiative comes as the U.S. aims to reduce its reliance on China, which accounts for an estimated 80% of global solar manufacturing capacity. In a statement, a spokesperson for the Chinese Embassy in Washington urged the U.S. to "stop the Section 232 tariff measures."

Market Impact and Industry Concerns

While intended to support domestic manufacturing, the proposed trade barriers have raised concerns about rising costs. Industry groups representing solar developers and semiconductor buyers have warned the Commerce Department that tariffs could inflate prices for solar power projects, consumer electronics, and automobiles.

Even some domestic manufacturers worry about the potential fallout. Martin Pochtaruk, CEO of panel maker Heliene, referred to the solar industry's involvement in the chip-focused investigation as "collateral damage," cautioning that projects could be canceled if costs become too high. Trade groups and some lawmakers have argued that imports from non-Chinese producers will be necessary to meet demand until U.S. polysilicon, wafer, and cell production can be sufficiently expanded.