US imposes up to 126% Tariffs on Indian solar panels-potential impact on global trade and energy markets
New Delhi/Washington, February 25, 2026:
The US has made a preliminary decision to impose countervailing duties of up to 126% on imports of Indian solar cells and solar panels. The US Department of Commerce states that this move is aimed at protecting domestic industry from the competitive advantage gained by foreign subsidies.
This decision comes at a time when India and the US have recently been trying to enhance trade cooperation. According to experts, this could create new complications in the trade relations between the two countries.
What is countervailing duty (CVD)?
Countervailing duty is an additional import duty imposed by a country when it believes that the government of another country is giving its own producers unfair competitive advantages in the international market by subsidizing them. US officials claim that government support for the solar industry in India, Indonesia, and Laos is harming US manufacturers.
US Argument: Protecting Domestic Industry
The US states that:
- Cheap imported solar panels were reducing the competitiveness of domestic companies.
- The US solar industry had complained to the government that foreign products were being sold at “unfair prices” due to subsidies.
- This move was taken to protect US manufacturing investment and employment.
The Role of India and Asian Countries
In recent years, a large portion of US solar imports have come from Asia.
India, Indonesia, and Laos together supply a large percentage of US solar imports.
- India’s solar exports to the US reached approximately $792 million in 2024.
- The US alleges that solar panels from these countries are cheaper than local products, putting pressure on domestic companies.
Potential Impact on Indian Industry
According to analysts, this decision could have several impacts:
- Decline in Exports
The 126% tariff will significantly increase the price of Indian solar panels in the US, which could reduce demand. - Impact on Companies’ Shares
Following this announcement, the shares of many Indian solar companies have seen a decline, as the US has been their primary market. - Oversupply in the Domestic Market
If exports decline, companies may become dependent on the domestic market, which could put pressure on prices.
Could the impact be limited?
Some companies believe that:
- Their domestic market is strong.
- There are plans to expand into markets other than exports.
- Some companies are considering setting up production in the US.
Potential Impact on the Global Solar Industry
This decision is not limited to India:
- Similar tariffs have also been imposed on Indonesia and Laos.
- This could impact global supply chains and solar prices.
- Energy transition and affordable renewable energy schemes could also be impacted.
What could happen next?
- The final decision is still pending, and further investigations are ongoing.
- India could challenge the decision in international forums such as the WTO.
- New trade talks between the two countries are also possible.
The US imposition of tariffs of up to 126% on Indian solar panels is a significant development for global trade, energy security, and India-US economic relations. This move is being touted as a measure to protect US industry, but it is feared to impact Indian exporters and the global solar market.
