Wacker is considering shutting down its polysilicon facility in Tennessee following the tariffs imposed by Trump, according to a report by Reuters.

      A German chemical company is contemplating shutting down its American plant that was intended to be safeguarded by the new polysilicon tariffs imposed by Washington. According to an exclusive report by Reuters, Wacker Chemie has lost its last two customers for polysilicon since the announcement of these measures and is evaluating the future of its factory in Charleston, Tennessee, which employs around 600 individuals.

      Polysilicon serves as the foundational material for solar panels and semiconductors. Currently, only two companies remain in the U.S. producing polysilicon: Wacker and Hemlock Semiconductor, after domestic production plummeted from approximately 50% of the global output in 2005 to below 2% by 2024.

      The White House's proclamation on August 6 aimed to reverse this trend by implementing a 15% duty on most imported polysilicon and its derivatives, along with price floors of $21 per kilogram for polysilicon and $100 for ingots and wafers, set to take effect in December.

      The issue lies in how these measures are applied. They affect ingots, wafers, cells, and panels regardless of whether the polysilicon was produced domestically, leaving U.S. producers with no advantage while their customers face higher prices. Wacker has pointed this out, stating that the proclamation "does not, as it reads now, effectively support the use of U.S.-made polysilicon."

      The fundamental economics remain unchanged. The cost of American polysilicon is roughly four times that of its Chinese counterpart, and a tariff that increases downstream prices does not bridge that gap. Christian Hartel had previously indicated this risk, with Wacker's CEO warning that the company might end up with "one plant too many" without trade actions that genuinely assist.

      The national security rationale for this policy was clear. Polysilicon-based chips are integral to defense systems, which the administration cited as justification for intervening in a market previously dominated by Chinese manufacturers.

      Wacker's customers are the first affected by the price floors. A wafer manufacturer purchasing American polysilicon at a price four times higher than the Chinese price, along with a floor on wafer prices, would understandably seek cheaper sources for the finished products.

      If Wacker's Tennessee operations were to close, only one American producer would remain, resulting in a supply chain thinner than the one the proclamation was intended to protect, created under a policy aimed at strengthening it. This pattern is often observed with such measures; tariffs imposed on foreign competitors primarily impact domestic customers who buy from those competitors, with domestic suppliers benefiting only if the policy differentiates between the two.

      The Tennessee facility is European-owned, complicating the political landscape. Wacker, a German firm that established manufacturing in the U.S.—the very behavior the administration claims to promote—is now the one contemplating withdrawal.

      Meanwhile, Chinese manufacturers are advancing in the value chain, having already established dominance in solar-grade polysilicon and are now expanding into semiconductor-grade materials, which have defense applications.

      Europe is also mindful of its dependency on the other side. The EU is developing its own plans for the clean technology sector while stockpiling €7 billion worth of Chinese solar panels, reflecting a realistic view of the actual extent of alternative supplies.

      The chip tariffs have also been inconsistent in other areas. TNW has outlined what the U.S. semiconductor tariff currently covers, noting that the parameters have shifted more than once.

      December is the critical date to watch. The measures will not take effect until then, providing a window during which the policy could be revised, possibly allowing a plant that has already lost its customers to regain them.

      Nothing has been finalized yet. No announcement of closure has been made, and the administration may still alter the proclamation to differentiate American polysilicon from imported materials, which is the change that Wacker is advocating for.