Some of China’s largest solar factories in Vietnam are cutting production and laying off workers, spurred by expanding U.S. tariffs targeting it and three other Southeast Asian countries.

Meanwhile, in neighboring Indonesia and Laos, a slew of new Chinese solar plants are springing up, beyond the reach of Washington’s trade protections. Their planned capacity is enough to supply about half of the panels installed in the United States last year, according to a Reuters report.

Chinese solar companies have repeatedly cut production at existing hubs while building new factories in other countries, allowing them to skirt tariffs and dominate the U.S. and global markets despite successive waves of American customs duties over more than a decade intended to curb them.

While Chinese companies have been offshoring their solar production for years, the extent of this shift to Indonesia and Laos during this latest phase has not yet been reported. More than a dozen people in five countries, including Chinese factory workers, non-Chinese solar company executives and lawyers, were interviewed for this article.

“It’s a huge game of cat and mouse,” said William A. Reinsch, a former Clinton administration trade official and senior adviser at the Center for Strategic and International Studies.

“It’s not that hard to move. You set up and play the game again. The design of the rules is such that the U.S. is usually one time behind.”

China accounts for about 80% of global solar shipments, while its export hubs elsewhere in Asia account for much of the rest, according to SPV Market Research. This is in stark contrast to what was happening twenty years ago, when the United States was a world leader in this sector.

U.S. imports of solar products have tripled since Washington began imposing tariffs in 2012, reaching a record $15 billion last year, according to federal data. While almost no products came directly from China in 2023, about 80% came from Vietnam, Thailand, Malaysia and Cambodia, which are home to factories owned by Chinese companies.

Washington imposed tariffs on solar exports from the four Southeast Asian countries last year and expanded them in October following complaints from U.S. manufacturers.

Over the past 18 months, at least four Chinese or China-linked projects have started operations in Indonesia and Laos, with two more announced. Together, the projects total 22.9 gigawatts (GW) of solar cell or panel capacity.

Much of this production will be sold in the United States, the world’s second-largest solar market after China and one of the most lucrative. Prices in the United States have been on average 40% higher than in China over the past four years, according to PVinsights data.

U.S. solar producers have repeatedly said in trade complaints filed with the U.S. government that they cannot compete with cheap Chinese products that they say are unfairly supported by subsidies from the Chinese government and Asian countries. ‘where they export.

Chinese solar companies have countered that their mastery of technology makes them more competitive on price.

Tariffs are a key theme in the US election, with former Republican President Donald Trump proposing levies on all US imports to boost US manufacturing, including a 60% rate on all goods from China . His rival, Democratic Vice President Kamala Harris, said Trump’s plan would increase costs for American consumers.

Lawmakers on both sides, however, have signaled support for stricter tariffs on Chinese solar shipments to nurture a domestic supply chain.

“Going forward, the American public should demand much stronger enforcement of tariffs, particularly with respect to (China’s) use of third countries to violate U.S. trade law,” he told Reuters. Republican MP John Moolenaar, chairman of the House Select Committee on China.

The U.S. Department of Commerce, the White House and China’s Commerce Ministry did not respond to Reuters requests for comment.

PAIN IN VIETNAM

The most immediate visible impact of the latest U.S. tariffs, which brought total tariffs to more than 300% for some producers, has been in Vietnam’s solar sector.

In August, Reuters visited industrial parks in northern Vietnam owned by Chinese companies, including Longi and Trina Solar, and spoke with workers.

In Bac Giang province, hundreds of workers at a large industrial complex belonging to Longi Green Energy Technology’s Vinasolar unit have lost their jobs this year, two employees with knowledge of the matter said.

The company was using only one of nine production lines at the industrial park, one said.

In Thai Nguyen, another province, Trina Solar shut down one of its two factories making solar cells and panels, two employees said.

Employees at both companies declined to be identified due to the sensitivity of the issue.

Longi did not respond to Reuters requests for comment. It announced in June that it had suspended production at a Vietnamese solar cell factory, but did not provide details. Trina declined to comment. It said in June that some facilities in Vietnam and Thailand would be closed for maintenance, without further details.

While U.S. solar import data shows shipments from Vietnam increased nearly 74% through August, industry analysts attributed the rise to anticipated export focus to get ahead of U.S. tariffs of this year.

The Vietnamese government did not respond to requests for comment.

NEW EXPORT BASES, AMERICAN FACTORIES

Chinese solar companies are flocking to Indonesia driven by tariffs imposed on Vietnam, according to Indonesian Industry Ministry official Beny Adi Purwanto, who cited Thornova Solar as an example. Thornova says on its website that its Indonesian factory has an annual capacity to build 2.5 GW of solar modules and 2.5 GW of solar cells for the North American market.

A new 1 GW Trina module and cell factory will be fully operational by the end of 2024 and will increase its capacity, according to Beny. He mentioned China Lesso Group’s solar module plant, which has a production capacity of 2.4 GW.

China-linked company New East Solar also announced last year the construction of a 3.5 GW panel and cell factory in Indonesia.

The Chinese companies did not respond to Reuters requests for comment.

The shift to Indonesian production was abrupt and rapid, according to an official at a U.S. solar company who was told by its Chinese supplier in Indonesia that it was inundated with large orders from large Chinese companies seeking to export to the UNITED STATES.

“The scale is totally different,” said the official, who requested anonymity.

Indonesia’s solar exports to the United States nearly doubled to $246 million through August 2024, according to federal data.

Solar companies looking for greener pastures in Laos include Imperial Star Solar. The company, which has Chinese roots but produces most of its output in Cambodia, opened a wafer factory in Laos in March, which should eventually have a capacity of 4 GW.

The move, it said in a statement at the time, helped it avoid U.S. tariffs.

SolarSpace also opened a 5 GW solar cell plant in Laos in September 2023. The main objective of transferring production capacity to Laos was not related to US tariffs, the company said in a statement to Reuters, without giving details.

Laos’ solar exports to the United States were nonexistent in the first eight months of last year, but worth some $48 million through August 2024.

Others go further.

JinkoSolar announced in July that it had signed a nearly $1 billion deal with partners in Saudi Arabia to build a new 10 GW solar cell and module factory in the kingdom.

Construction of solar manufacturing plants in the United States by Chinese companies is also on the rise as they, too, seek to take advantage of U.S. incentives.

Chinese companies will have at least 20 GW of annual solar panel production capacity on U.S. soil over the next year, enough to serve about half the U.S. market, according to a Reuters analysis.