The Trump administration has imposed steep preliminary countervailing duties of up to 126% on solar panels and cells imported from India, citing unfair government subsidies that undercut American manufacturers. The US Commerce Department's announcement escalates trade tensions at a sensitive time, just as India and the US were advancing a bilateral deal to ease tariffs on various goods.

The tariffs target India's rapidly growing solar exports, which surged to $792.6 million in 2024—a ninefold jump from two years prior—and captured over half of US solar module imports early last year alongside shipments from Indonesia and Laos. Officials argue these low-cost panels stem from subsidies that distort the market, prompting parallel probes into anti-dumping practices. A final decision on the duties is slated for July 2026.

The decision disrupts momentum from recent US-India negotiations, where tariffs on Indian products were set to drop from 50% to 18%. However, fallout from a Supreme Court ruling invalidating broader Trump tariffs has shifted focus to a 10% baseline rate, with whispers of hikes to 15%. High-level talks, originally planned soon, are now indefinitely postponed. Industry voices like Tim Brightbill of the Alliance for American Solar Manufacturing hailed the step as essential for fairness: "US investments won't survive against subsidized dumping." Yet critics warn it could inflate solar costs amid high interest rates, hampering domestic clean energy projects.

This action mirrors penalties on other nations—Indonesia faces 86-143% duties, Laos 81%—seen as conduits for Chinese production evading earlier US barriers. For India, a key player in global renewables with its own manufacturing incentives, the hit threatens a vital US market and may push exports toward Europe or Australia.

Developers on both sides brace for uncertainty: stockpiling imports before full enforcement or scouting alternatives like Vietnam. As President Trump's "America First" policy dominates, this flare-up highlights the fragility of ally trade ties in the race for energy security. Updates expected as probes progress.