The ongoing rivalry between the United States and China is increasingly affecting the solar energy market, with new tariffs on Chinese solar imports coming into effect on September 27, 2024. This development poses a significant challenge to global clean energy initiatives, as China has been a dominant force in the solar sector, adding more utility-scale solar capacity than the rest of the world combined in 2023. By 2024, China's installed solar and wind capacity reached an impressive 1,120 GW, accounting for nearly 37% of its total power capacity [976c75c1].
China's control over more than 80% of global solar panel production is largely attributed to state policies that favor domestic manufacturing. In contrast, US solar manufacturers are struggling to compete against the influx of cheap Chinese imports, which threatens the viability of the domestic solar industry. The Biden administration had previously implemented a two-year tariff moratorium in 2022 on solar imports from Southeast Asia, but the recent tariff changes signal a shift in strategy aimed at protecting American jobs and production [976c75c1].
As the US grapples with balancing the need for affordable solar power against the imperative to protect its domestic industry, environmental concerns are also surfacing regarding the carbon footprint associated with Chinese-made solar panels. Both nations have set ambitious goals to triple global renewable energy capacity by 2030, but the path forward is fraught with complexities as they navigate their competing interests [976c75c1].
In Malaysia, the implications of these tariffs are particularly pronounced. Prime Minister Anwar Ibrahim is under pressure as US tariffs threaten to disrupt the country's 'China plus one' strategy, which aims to diversify trade partnerships. The US Department of Commerce is investigating solar panel exports from Malaysia, potentially leading to tariffs as high as 270%. This scrutiny comes at a time when Malaysia has attracted over US$20 billion in technology investments, including a significant US$6.2 billion investment from Amazon Web Services [acec284d].
The fallout from these tariffs is already being felt in Malaysia, with reports of Jinko Solar laying off hundreds of workers in Penang due to the uncertainty surrounding US trade policies. The potential for job losses and factory closures raises concerns about the broader economic impact, particularly on Malaysia's semiconductor sector, which is closely tied to global supply chains [2e71b6b8]. As the investigations continue, the future of Malaysia's economy and its role in the global solar market remain in jeopardy [638b0813].