Southeast Asia’s solar industry is facing major challenges after the imposition of heavy U.S. tariffs. To turn these into opportunities, ASEAN must diversify its export markets and strengthen domestic demand
Di Fabrizio Bottara
When the United States imposed unprecedented tariffs on solar panels and cells from Cambodia, Vietnam, Thailand, and Malaysia, it rang an alarm bell for the entire Southeast Asian sector: if exports continue to depend too heavily on the U.S. market, the whole supply chain risks fragility and economic shocks that will be hard to absorb. The tariffs have already had a deep and uneven impact on exports to the U.S. Cambodia, Vietnam, and Thailand are at the forefront of the complaints, while the overall picture of the sector has been upended. “This commercial shift demands a change of paradigm,” according to an editorial published in Nikkei by Huang Yijia and Yan Bowen, researchers at the Asia Competitiveness Institute of the Lee Kuan Yew School of Public Policy, National University of Singapore. In some areas, major Chinese companies that had relocated production to ASEAN to avoid tariffs have already anticipated the crisis, moving to less penalized regions such as Indonesia or Laos, or even bringing part of their production back to the U.S. For ASEAN’s solar sector, this is an aspect to take into account: the model built on easy access to the American market is no longer sustainable. Southeast Asian countries are therefore considering possible ways to steer the industry so that it can emerge stronger and more resilient. Redirecting toward emerging markets such as Europe, Japan, and Australia can cushion the blow of reduced U.S. exports. Not only that: developing internal demand within ASEAN by promoting local installation of solar systems can support the supply chain, create jobs, and enable greater strategic autonomy. Coordinated action among ASEAN countries can foster economies of scale and more efficient distribution models. The idea of an ASEAN Power Grid — a regional electricity network — could boost the sharing of renewable resources and improve energy security. With fewer outlets to the U.S., part of the industry can find a market for its excess supply within ASEAN itself, reducing transportation costs and accelerating the regional energy transition. According to analysts, dependence on Chinese components can be reduced by developing local R&D capacity, producing higher-value components, and advancing toward comprehensive clean tech systems. It is a path that requires investment but one that could potentially raise the entire sector. Many companies, especially smaller ones, risk shutting down. They will need public and private support to relocate or restructure, for example by targeting new regional markets or developing turnkey solutions. The conclusion is clear: the protectionist wind that has struck ASEAN solar exports to the U.S. is an urgent wake-up call. But it can be turned into an opportunity — if the sector knows how to diversify markets, strengthen domestic and regional demand, push for innovation, cooperate as a political-economic bloc, and turn excess capacity into new services for local markets. ASEAN’s solar industry today has the chance to rise and become a driver of energy transition — autonomous and sustainable within its borders, while maintaining a careful and diversified projection outward.
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