Trump's bid to shield chip supply chain could backfire in Tennessee

• White House proclamation announced August 6 applies tariffs equally to products made with foreign or U.S. polysilicon, maintaining the cost disadvantage for American material that can cost four times more than foreign alternatives
• Wacker had already cut jobs at the $2.5 billion Charleston plant, with CEO Christian Hartel warning before the proclamation that the company could have 'one plant too many' if trade action was not beneficial
• Only two companies produce polysilicon domestically; the policy treats Chinese and American materials the same, failing to incentivize purchases of U.S.-made polysilicon despite national security concerns about Chinese dominance

Summary: Trump Trade Measures Threaten Tennessee Polysilicon Plant Closure

A Tennessee polysilicon facility employing approximately 600 workers faces potential closure after Trump administration trade measures inadvertently drove away its two remaining customers. Germany's Wacker Chemie will decide in coming weeks whether to shutter its Charleston, Tennessee plant, which produces polysilicon for semiconductors and solar panels.

Key Issue: White House proclamation announced August 6 established price floors and tariffs on polysilicon ingots, wafers, cells, and solar panels. However, the measures apply equally to products made with both foreign and domestic polysilicon, failing to provide competitive advantage to U.S.-produced materials that cost up to four times more than Chinese alternatives.

Market Context: Chinese firms dominate solar-grade polysilicon production and are increasingly capturing market share in higher-grade semiconductor polysilicon. Only two companies produce polysilicon domestically in the U.S. – Wacker and Hemlock Semiconductor (owned by Corning).

Company Status: Wacker's $2.5 billion Charleston plant had already cut jobs last year. CEO Christian Hartel previously warned of excess capacity, stating the company could have "one plant too many" if trade measures weren't beneficial. Wacker stated the current proclamation "does not effectively support the use of U.S. made polysilicon."

Policy Implications: The situation exemplifies unintended consequences of Trump trade policies, similar to prior tariff measures that raised costs for U.S. automakers. The Coalition for a Prosperous America argues implementation rules taking effect in December should prioritize domestic polysilicon purchases to prevent ceding both solar and semiconductor supply chains to China, calling it a "direct national security threat."

Hemlock Semiconductor remains more insulated as owner Corning purchases its solar-grade polysilicon for domestic wafer production.