Trump orders new 15% tariff on key material for solar panels and microchips

Donald Trump has ordered a new 15% tariff on imported products made of Polysilicon, an important ingredient in microchip manufacturing that is primarily produced by China.The new tariff, which will take effect on 4 December, is aimed at supporting US chip and solar panel supply chains to compete with Beijing on Artificial Intelligence and energy.The executive order signed by the president on Thursday evening said: “The plan of action in ⁠this proclamation will, among other things, help ensure the commercial viability of United States production of Polysilicon and its derivatives that is necessary to meet United States economic and national security requirements.”Polysilicon, an ultra-pure form of silicon, is an important ingredient in making the semiconductors vital for AI processing power, datacentres and solar power generation.US solar factories have long accused Chinese ‌rivals of dumping cheaper panels on the ‌market, which they say have been enabled by excessive government subsidies and by moving manufacturing to other countries to dodge US tariffs.China’s foreign affairs ministry hit back at the latest measures, accusing the US of “overstretching the concept of national security, and abusing state power to go after Chinese businesses”.Solar Panels advance toward final testing at a First Solar manufacturing facility in Perrysburg, Ohio, US. Photograph: Emily Elconin/Bloomberg via Getty Images“Protectionism will not make the US more competitive,” the spokesperson Lin Jian said, arguing that the move “seriously disrupts normal trade and economic exchanges between Chinese and US businesses, and is not in the interest of US businesses and consumers or anyone else for that matter”.“China will continue firmly protecting our businesses’ legitimate and lawful rights and interests,” Lin added.The US has two main Polysilicon factories, including Hemlock Semiconductor, which operates ‌a plant in Michigan and is a joint venture between the US tech company Corning and Japan’s Shin-Etsu Handotai. The Munich-based Wacker Chemie runs a factory in Tennessee.A spokesperson for Corning said the new tariff encouraged “continued investment in US capacity and supports long-term US competitiveness”, while Wacker said it appreciated the administration’s engagement “given the ramifications for semiconductor supply chain resilience, advanced computing infrastructure, and broader US defence and security interests”.Trump said in the order that he had accepted recommendations by the commerce secretary, Howard Lutnick, to set minimum ​import prices of $21 (£15.62) a kilogram ​for Polysilicon, $100 a kilogram for Polysilicon ingots and wafers, $0.22 a watt for solar cells, and $0.38 a watt for solar modules or panels.skip past newsletter promotionafter newsletter promotionThe order also allows the commerce department to create an incentive programme for companies that invest in factories to produce Polysilicon or derivative products.Trump’s move against China comes as Beijing revealed the country’s exports surged by 23.9% in dollar terms year-on-year in July, driven by shipments of AI-related products.Sheana Yue, senior Asia economist at the consultancy Oxford Economics, said China’s “strong electronics and machinery exports”, combined with industrial input imports, suggested that “AI and electrification will drive global manufacturing”.She added that although disruption in the Middle East could continue to keep energy and transport costs elevated, “China’s competitiveness in AI hardware, electric vehicles, batteries, and other high-value manufacturing will probably allow it to continue gaining global export market share despite softer demand”.