Sky-high US tariffs on Chinese solar firms with factories in Vietnam, Malaysia, Thailand and Cambodia are prompting some of these companies to consider relocating to Indonesia – a rare bright spot in the region that analysts say may not remain shielded for long. US President Donald Trump’s administration in late April imposed punitive duties of up to 3,500 per cent on solar components exported from the four Southeast Asian countries, targeting Chinese firms accused of routing shipments through the region to sidestep previous trade restrictions. Indonesia and Laos, which the US tariffs have not hit, recently attracted new investments from Chinese-owned solar firms seeking to bypass American trade barriers. Chinese firms featured prominently at Solartech Indonesia 2025, a trade exhibition for solar and photovoltaic energy held in Jakarta last week, including solar panel manufacturers Jinko Solar and Trina Solar. This comes after at least four new solar projects linked to Chinese companies have begun operating in Indonesia and Laos, with two more in development, according to Reuters. Together, they aim to produce 22.9 gigawatts of solar capacity, primarily destined for the United States. Among the major players are Thornova Solar, the US-based subsidiary of China’s Yuncheng Solar Technology; New East Solar, another China-linked firm; and Lesso Group, a Chinese conglomerate best known for manufacturing industrial materials. US government data shows imports of solar products from Indonesia reached US$246 million in August, nearly doubling from the previous year. Curbing China’s dominance For over a decade, Washington has steadily ramped up pressure on Chinese solar firms, as China emerged as the dominant force in global solar exports, surpassing the US and accounting for 80 per cent of worldwide solar cell shipments in 2023, according to SPV Market Research. Since 2012, successive rounds of US tariffs on Chinese solar products have driven many manufacturers to relocate operations to Southeast Asia – primarily in Cambodia, Vietnam, Malaysia and Thailand. But this strategy hit a wall in December when the US Department of Commerce slapped anti-dumping duties of up to 271.2 per cent on solar products from these four countries, effectively shutting down a US$12 billion Chinese export pipeline and prompting firms to rethink operations. The new tariffs announced in April are significantly higher than the December preliminary duties, varying by country and company: up to 3,521 per cent for Cambodia, up to 972 per cent for Thailand, as much as 542 per cent for Vietnam, and up to 250 per cent for Malaysia. Meanwhile, new combined dumping and countervailing duties on Jinko Solar products from Malaysia were among the lowest at 41.56 per cent. Rival Trina Solar’s products from its operations in Thailand face tariffs of 375.19 per cent. These latest trade protections follow a year-old case brought by American manufacturers, who accuse Chinese companies operating in Southeast Asia of flooding the US market with cheap solar components – selling below domestic rates and benefiting from subsidies that undercut American-made panels. For the tariffs to be finalised, the International Trade Commission must vote in June on whether the dumped and subsidised imports significantly harmed the industry. Indonesia’s solar power ambitions So far, Indonesia has avoided direct tariffs on its solar manufacturing sector, but it has actively worked to attract investment. In August, Jakarta relaxed its regulatory requirements, lowering the proportion of locally sourced materials needed in solar projects from 40 per cent to 20 per cent, which had been viewed as a significant barrier. Fabby Tumiwa, executive director at the Institute for Essential Services Reform think tank and an energy-transition strategist, said that Indonesia has been working since 2010 to develop its solar manufacturing industry and utilise its silica reserves to create a complete solar supply chain. “In the last five years, we can see Indonesia has been trying to lure in investment from China because China controls the technology … they are the major producers,” he said. China is an ideal investment partner, Fabby said because it holds 90 per cent market share in key segments of the solar supply chain, which benefits countries like Indonesia in growing their renewable energy sectors. Indonesia’s strong trade tie with China could also lead it to align more closely with Beijing following Trump’s recent tariffs, he added. “We have good relations with both China and the US, but some people might say we are leaning towards China now, and cooperation with China can become stronger on solar too,” he said. Indonesia’s Minister of Investment and Downstreaming Rosan Roeslani secured US$7.5 billion in investment pledges from Chinese companies during his visit to Beijing in December, with US$5 billion coming from Hongshi Group for a solar panel industrial estate in East Kalimantan. Indonesia is also attracting solar investments through the Just Energy Transition Partnership (JETP), an initiative with public and private lenders from advanced economies to phase out coal. The US, initially a participant, withdrew from the initiative in March. On Tuesday, Standard Chartered, Germany’s DEG, and France’s Proparco announced a US$60 million investment through JETP to build a 92-megawatt floating solar plant in West Java. Developed by Saudi Arabia’s ACWA Power and Indonesia’s PLN Indonesia Power, the project aims to increase solar electricity output and cut carbon emissions by over 63,000 tonnes each year. However, analysts note that Indonesia’s solar ambitions lag behind its Southeast Asian counterparts due to weak domestic demand, stringent regulations, and underdeveloped electronic manufacturing and infrastructure. Despite Indonesia’s vast renewable energy potential, solar and geothermal sources accounted for just 13 per cent of Indonesia’s energy mix in 2023 – short of the government’s 17.87 per cent target. But Fabby notes that the government is moving towards a shift away from coal and oil dependence. Indonesia’s National Electricity Plan 2024–2060 emphasises renewables, he said, with expected domestic demand for solar energy to “increase dramatically” in the coming years. Indonesia has so far avoided US tariffs on its solar sector due to its small size and limited trade volume with Washington, according to Putra Adhiguna, managing director at the Energy Shift Institute in Indonesia. While Indonesia’s efforts to attract Chinese solar firms could create new opportunities, they also carry risks should the US extend its solar tariffs. The US-China solar dispute has already disrupted Southeast Asian supply chains, resulting in factory closures and job losses in countries like Vietnam. Putra notes that while foreign investment in Indonesia’s solar sector is gaining traction, the trade war and an oversupply of solar products will shape future investment trends. “Manufacturers will likely view the window of opportunity in terms of months rather than years, given the current uncertainty,” he said. Additional reporting by Reuters