Wacker is considering the closure of its polysilicon plant in Tennessee following tariffs imposed by Trump, according to a report by Reuters.

      A German chemical manufacturer is contemplating the closure of its American facility that was intended to benefit from Washington's new polysilicon tariffs. Wacker Chemie has lost its last two customers for the product since the announcement of these measures and is evaluating the future of its Charleston, Tennessee plant, which employs roughly 600 workers, according to an exclusive report from Reuters.

      Polysilicon serves as the fundamental material for solar panels and semiconductors. Currently, only two companies produce it in the United States—Wacker and Hemlock Semiconductor—after domestic production plummeted from about 50% of global output in 2005 to under 2% by 2024.

      The White House's proclamation on August 6 was designed to reverse this trend. It imposed a 15% tariff on most imported polysilicon and derivatives and established minimum prices of $21 per kilogram for polysilicon and $100 for ingots and wafers, set to take effect in December.

      The issue lies with how the measures are applied. They cover ingots, wafers, cells, and panels, irrespective of whether the polysilicon used was produced in the U.S., meaning domestic producers gain nothing while their customers face higher costs.

      Wacker has expressed this concern. The company stated that the proclamation "does not, as it reads now, effectively support the use of U.S.-made polysilicon."

      The fundamental economics have not changed. American polysilicon is roughly four times more expensive than the Chinese alternative, and a tariff that increases costs downstream does not resolve that disparity.

      Christian Hartel had previously indicated the risk, with Wacker's CEO warning that the company might end up with "one plant too many" without trade policies that genuinely provided help.

      The national security justification for the policy was particular. Chips made from polysilicon are used in defense systems, which the administration cited as the reason for their intervention in a market previously dominated by Chinese manufacturers.

      Wacker's clients are the first to feel the impact of the price floors. A wafer manufacturer purchasing American polysilicon at four times the cost of Chinese polysilicon, and then paying a minimum price on the wafers it produces, has every incentive to source the final product from a place where the costs are lower.

      If Wacker’s Tennessee production is lost, only one American producer will remain. This results in a more fragile supply chain than the one the proclamation was intended to protect, created by a policy designed to strengthen it.

      This situation showcases a familiar pattern with such tools. A tariff directed at a foreign competitor ultimately affects the domestic customers who buy from that competitor, and the domestic supplier only benefits if the policy differentiates between them.

      The Tennessee facility is European-owned, which complicates the political landscape. Wacker is a German firm that established manufacturing operations in America, aligning with the administration's stated intentions, and is now the one contemplating departure.

      Meanwhile, Chinese manufacturers are advancing within the value chain. They already dominate the solar-grade polysilicon market and are expanding into semiconductor-grade materials, which have defense applications.

      Europe is also observing a similar dependency from its own perspective. The EU has been devising its own plans for the clean tech competition while stockpiling €7 billion worth of Chinese solar panels, reflecting an acknowledgment of the limitations of alternative supply sources.

      The chip tariffs have also shown imprecision in other areas. TNW has outlined what the current U.S. semiconductor tariff encompasses and does not, indicating shifting parameters.

      December is the critical timeline. The measures will not take effect until then, allowing time for potential changes in the drafting, which could help a plant that has already lost its customers reconnect with them.

      Nothing has been finalized yet. No closure has been declared, and the administration still has the opportunity to revise the proclamation to create a distinction between American polysilicon and imports, which is the modification Wacker is requesting.