Nov 4 (Reuters) - Some of the biggest Chinese-owned solar factories in Vietnam are cutting production and laying off workers, spurred on by the expansion of U.S. trade tariffs targeting it and three other Southeast Asian countries.
Meanwhile, in nearby Indonesia and Laos, a slew of new Chinese-owned solar plants are popping up, out of the reach of Washington’s trade protections. Their planned capacity is enough to supply about half the panels installed in the U.S. last year, Reuters reporting shows.
Chinese solar firms have repeatedly shrunk output in existing hubs while building new factories in other countries, allowing them to sidestep tariffs and dominate the U.S. and global markets despite successive waves of U.S. tariffs over more than a decade designed to rein them in.
“It’s a huge cat and mouse game,” said William A. Reinsch, a former trade official in the Clinton administration and senior adviser at the Center for Strategic and International Studies.
“It’s not that hard to move. You set up and you play the game again. The design of the rules is such that the U.S. is usually one step behind.”
China accounts for about 80% of the world’s solar shipments, while its export hubs elsewhere in Asia make up much of the rest, according to SPV Market Research. That’s a sharp contrast to two decades ago when the U.S. was a global leader in the industry.
America’s imports of solar supplies, meanwhile, have tripled since Washington began imposing its tariffs in 2012, hitting a record $15 billion last year, according to federal data. While almost none came directly from China in 2023, some 80% came from Vietnam, Thailand, Malaysia and Cambodia – home to factories owned by Chinese firms. Washington slapped tariffs on solar exports from those four Southeast Asia nations last year and expanded them in October following complaints from manufacturers in the United States.
An important point that isn’t mentioned in this article is that when the US targets third countries in their efforts to kneecap Chinese companies, it is hurting its own geostrategic interests. The US has been working hard to draw countries like Vietnam and Indonesia into its orbit as part of its containment strategy against China, but when it slaps tariffs on exports from these countries, years of diplomatic goodwill get instantly cancelled out. Especially since the US nowadays has no economic carrots to offer suitors, thanks to its bipartisan anti-trade turn. It’s all sticks.