Solar Panels and Sovereignty: Trade Tensions Around Green Tech Supply Chains

Solar panels are a symbol of environmental progress—a clean energy solution quietly yet visibly transforming rooftops and reducing carbon footprints. But in 2025, they also join the growing trade and policy debate. As governments invest in clean energy and aim to localize critical industries, the solar sector faces new pressures tied to national security, industrial policy, and ethical sourcing. Solar technology, especially its supply chain, has become a key concern in trade policy and global energy markets.

Who Controls the Solar Supply Chain?

The solar panel supply chain is complex and global, involving multiple stages: mining and refining polysilicon, manufacturing wafers, producing solar cells, and assembling modules. Right now, China dominates nearly every link in that chain. It produces over 80% of the world’s polysilicon and accounts for more than 90% of solar wafer production.

Other countries, especially the U.S., members of the EU, and India, remain highly dependent on Chinese inputs. Even when solar modules are assembled in Southeast Asia or elsewhere, the raw materials or subcomponents often originate in China.

That dependence is becoming a strategic liability for nations aiming to decarbonize and meet their clean energy goals.

Policy Shifts: Sovereignty vs. Sustainability

Over the past few years, the United States and the European Union have taken increasingly aggressive steps to reduce their reliance on Chinese solar inputs.

In the U.S., solar panels have been hit by a wave of tariffs—from Section 201 and 301 duties on Chinese components to the Uyghur Forced Labor Prevention Act, which blocks imports of any solar goods suspected of being linked to forced labor in Xinjiang. The Biden and Trump administrations alike have supported reshoring initiatives. The Biden administration in particular supported the solar sector by issuing generous tax credits for domestic solar production under the Inflation Reduction Act.

In the EU, things are moving more cautiously but in the same direction. The EU’s Carbon Border Adjustment Mechanism (CBAM), while primarily focused on carbon emissions, is a signal of growing alignment between climate goals and trade enforcement. Brussels also pushes solar manufacturing incentives as part of the broader Net-Zero Industry Act.

But these protectionist policies can clash with sustainability goals. Solar deployment becomes slower and more expensive, raising questions about how best to balance climate urgency with industrial resilience.

Forced Labor and the ESG Dilemma

A major ethical challenge at the heart of the solar trade war is the use of forced labor in China’s Xinjiang region, where a significant share of the world’s polysilicon is produced. Reports of widespread abuses have prompted the U.S. to block imports of products made with materials from the region, citing human rights violations.

Investors and energy buyers are under pressure, too. ESG (Environmental, Social, and Governance) mandates force companies to dig deeper into their supply chains. As a result, utilities, procurement teams, and even homeowners are beginning to question the origin and theater of production when purchasing solar installations.

This growing scrutiny isn’t going away. And it’s prompting a rethink of global sourcing strategies. Not just for solar, but for the entire clean energy economy.

The Cost of Decoupling

Efforts to reduce dependency on China come with trade-offs. Domestic manufacturing takes time to scale. Alternative suppliers in countries like Vietnam, Malaysia, or Turkey exist but are often still tied to Chinese inputs. In the short term, that means higher costs, longer project timelines, and occasional supply chain bottlenecks.

These effects are felt most sharply in developing countries, where solar energy is both a climate solution and an economic necessity. When panels become more expensive or harder to access, it undermines efforts to expand electricity access, reduce emissions, and build climate resilience.

Balancing Control and Cooperation

Trade restrictions, human rights concerns, and supply chain strategies reshape how the world builds its clean energy future. The fight to control solar supply chains could slow down the very transition they’re meant to accelerate. Decarbonization depends on cooperation, but sovereignty demands control. Finding the balance between the two will define the next decade of global solar energy supply.