Solar energy is built on a single raw material called polysilicon, and China controls more than 95% of its global supply.

Trump signed a proclamation last week that changes the economics of that dependence, imposing a 15% tariff and mandatory price floors on imported polysilicon, solar cells, and modules effective Dec. 4.

What the price floors actually mean

Polysilicon is refined silicon used to make solar panels and semiconductors. The entire supply chain flows from it: polysilicon gets shaped into ingots, sliced into wafers, wired into cells, and assembled into modules.

The new minimum prices set a floor of $21 per kilogram for raw polysilicon, $100 per kilogram for ingots and wafers, $0.22 per watt for solar cells, and $0.38 per watt for modules. These are hard price floors that importers must certify compliance with or face duties equal to the gap.

Chinese factories can produce solar cells for roughly $0.10 per watt, compared with the new US price floor of $0.22. For imported modules, the gap is similar, with current prices around $0.27 per watt versus a new floor of $0.38.

For US manufacturers, that spread is margin. For solar developers buying imported panels, it's a cost hike.

Who wins when costs reset

US solar manufacturers rallied sharply on the news. First SolarFSLR

gained roughly 6% the day after the announcement, while T1 EnergyTE

, which operates a solar module factory in Dallas and is building a solar cell plant, jumped about 13%.

CorningGLW

, best known for glass and fiber optics also rose on the news. Corning recently expanded into polysilicon production, making the raw material as well as wafers and ingots at a new Michigan facility, products that now sit behind a price floor.

The Invesco Solar ETFTAN

gained more than 2%, reflecting broad sector optimism among domestic producers.

The proclamation also includes an onshoring program. Companies that commit to building US factories for polysilicon, ingots, wafers, or cells before Jan. 20, 2029 can apply for exemptions from the tariffs during their construction period.

JPMorgan analysts noted the full-chain approach could reduce pricing, cut geopolitical risk, and improve long-term investor sentiment for the sector.

The cost of reshoring

The bull case for domestic manufacturers is clear, but so are the risks for the broader solar market. The US already pays more than double the global average for solar panels after years of prior tariffs. Adding price floors on top pushes costs further above international benchmarks.

Guggenheim Securities analysts estimate the new rules will add roughly 12% to the overall cost of US solar systems.

US solar manufacturing share has collapsed over two decades. The US held 50% of global polysilicon production capacity in 2005. By 2024, that share had fallen to under 2%. The country is now almost entirely dependent on imports for solar ingots, wafers, and cells.

Building back from near zero takes time and capital. Most existing US solar factories still rely on equipment sourced from China. BloombergNEF analysts note that US production costs remain substantially higher than Chinese equivalents even with the new protections in place.

The tariff action also arrives alongside other headwinds. Trump's second-term policies have ended federal tax credits for solar installations and slowed green energy permitting, moves that reduce the total installed base these manufacturers would sell into.

For investors, the sector has now split into two. Domestic manufacturers with operational or near-operational US facilities, including First Solar, T1 Energy, and Corning, stand to benefit directly from the new price floors. On the other side, solar developers and installers that rely on imported panels face higher costs, leaving open the question of who ultimately absorbs them.

The broader Invesco Solar ETF ETF blends manufacturers with developers, so its post-announcement gain likely understates the divergence happening underneath the index.