US tariffs on Chinese solar cells and panels have led many Chinese manufacturers to relocate their supply chains to Southeast Asian countries like Cambodia, Malaysia, Thailand, and Vietnam to avoid these levies.

The US Commerce Department has recently imposed preliminary duties on Chinese solar manufacturers exporting from Southeast Asia, following complaints from US solar companies about low-priced imports.

President-elect Donald Trump has pledged to impose tariffs of at least 60 percent on goods from China, further incentivizing manufacturers to shift operations to Southeast Asian nations.

Despite these shifts, the US solar market remains relatively small, accounting for less than 10% of the global solar panel market, complicating the industry's ability to fully disengage from Chinese manufacturers.

This trend of relocating supply chains began during Trump's first term from 2017 to 2021, when US tariffs on Chinese goods reached as high as 25 percent.

Manufacturers are keen to learn from Chinese solar companies that have successfully adapted to US tariffs, as China holds over 80% of the global solar manufacturing market.

Vietnam has become a significant manufacturing hub, attracting substantial Chinese direct investment, which constituted nearly 30% of new projects in the first half of 2024.

Longi, a major Chinese solar manufacturer, has expanded its production facilities in Malaysia, Thailand, and Vietnam since 2016 and has announced plans for a joint venture factory in the US.

Businesses are bracing for the economic implications of a potential second Trump presidency, which could result in increased tariffs on nearly all imports from China.

Chinese investors are also exploring manufacturing opportunities in Gulf Cooperation Council countries, such as Saudi Arabia and the UAE, to mitigate the impact of potential tariffs.

The trend of relocating supply chains is extending beyond Southeast Asia, with significant increases in US imports from Indonesia and Laos in 2023.

This ongoing supply chain rerouting is often described as a game of 'whack-a-mole,' where companies must navigate high market prices in the US by relocating to avoid duties.