Climate Action
What Do Rising Tariffs Mean for Green Energy?
May 12, 2025
Everyone’s talking about tariffs lately, but do you know what they mean for green energy? Tariffs are taxes imposed on imported goods and services. If you major in economics or have taken a Principles of Economics course in college, you might know that it is a tax imposed on imported goods. It is usually designed to raise tax revenue, reduce imports, or protect domestic industries from foreign competition.
There are two types of tariffs: ad valorem tariff and specific tariff. An ad valorem tariff is charged as a percentage of the product’s price and is typically used for imported goods with fluctuating prices.
A specific tariff is based on the quantity of goods and is commonly used for items like food and beverages. All the percentage-based tariffs in the news lately are almost always referring to ad valorem tariffs.
The calculation for ad valorem tariffs is simple, as it is measured with a fixed percentage of the assessed commercial value of the goods. For example, a 10% tariff on a car imported from outside the United States costing $10,000 would mean a tariff of $1,000.
So, who pays these tariffs? Domestic companies pay for them when they import foreign goods and these are then nearly always passed onto consumers. In the United States, the tariffs are collected by Customs and Border Protection as goods enter the United State and they recently told CNBC they had collected more than $500 million since April 5, 2025, under the current administration.
Clean energy industries are also affected by the new tariffs, as many rely on imported components—particularly from China, which remains the leading global supplier of solar panels, batteries, and other renewable technologies.
Good or Bad for Green Energy?
So here’s the real question: Are tariffs helping or hurting the global transition to green energy? At first glance, they might seem harmful to the environment by raising the cost of clean technology. But the real answer is a little more complicated.
As seen in recent headlines, tariffs create challenges for companies that rely on importing materials or products from outside the United States. For these firms, tariff increases their production costs, particularly marginal cost, which is the expense of producing one additional unit. However, by raising the barrier to cheaper imports, tariffs can also encourage domestic production and support the growth of local industries. This trade-off raises important questions about the balance between economic protectionism and environmental progress.
The Solar Tariff Dilemma
Tariffs on solar panels are not a new thing. In 2012, the Obama administration imposed tariffs on Chinese solar manufacturers under its anti-dumping and countervailing duty (AD/CVD) laws. ‘Dumping’ is when a company sells products in another country at prices lower than in its own country, often to gain more market share.
On April 21, the U.S. government significantly expanded tariffs to cover solar panels from Southeast Asia, imposing duties as high as 3,521%. This move stems from long standing concerns raised during the Biden administration, when major U.S. solar manufacturers sought protection against unfair competition. The new tariffs target companies in Cambodia, Thailand, Malaysia, and Vietnam—countries accused of serving as conduits for Chinese subsidies and flooding the market with artificially low-priced products.
Protecting Domestic Solar Manufacturing
Over the past decade, U.S. policy on solar panel imports has aimed to protect domestic manufacturers, and during that time, the solar industry has grown significantly — averaging 28% annual growth in deployments. By 2023, the industry supported nearly 280,000 American jobs across more than 10,000 companies nationwide and attracted over $70 billion in private investment.
Despite this progress, China still dominates the global solar panel market, producing over 80% of the world’s supply. Chinese solar products are typically 20% cheaper than American-made alternatives, largely due to their control of the polysilicon supply — the primary material used in solar panels. In 2023, 93% of the world’s polysilicon was produced by Chinese firms.
China’s cost advantage is further amplified by its reliance on coal-powered energy and supportive government policies, which allow manufacturers to produce solar panels at lower prices — but with a higher carbon footprint. This creates a paradox: while solar energy is a solution to climate change, the coal-intensive methods used to produce many of the world’s panels undermine their environmental benefits.
This makes the debate over tariffs complex. On one hand, tariffs help strengthen the U.S. solar industry and reduce reliance on coal-powered imports. On the other hand, they risk slowing the global adoption of clean energy by making solar panels more expensive in the short term. In balancing economic resilience and climate progress, there’s no one-size-fits-all answer.
Let’s Support Green Energy
Despite these complexities, one thing is clear: the world needs more clean energy — fast. Solar panels remain one of the most effective ways to cut down carbon emissions and reach zero carbon emissions goals. If you’re passionate about driving this global change, support us by signing the Our Power, Our Planet Renewable Energy Petition! This campaign urges stronger commitments to clean energy, and your signature will amplify our message to the United Nations at COP30 in November 2025. Every signature makes a difference.
Want to go a step furtherSpeak up for climate action by sending a letter to your Lawmakers and State Lawmakers. Let’s stand together to push back against rollbacks and promote renewable energy in our communities.
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