Thailand’s Solar Sector Faces Trade Uncertainty Amid U.S. Suspension

Thailand’s solar and renewable energy sector is facing fresh uncertainty following an announcement from the country’s Foreign Ministry that the United States had temporarily suspended negotiations on a critical trade framework deal. Initially, the U.S. linked the suspension to Thailand’s commitment to a truce with Cambodia, demonstrating how geopolitical issues unrelated to energy can quickly impact the renewable energy supply chain. Although the Thai government later clarified that trade talks are expected to continue separately from the Cambodia border matter, the initial halt highlights the vulnerability of international trade agreements that currently support Southeast Asia’s manufacturing economy.

For the solar industry, regulatory clarity and stable trade channels are essential because margins are tight and supply chains are global. The U.S. had previously introduced a framework that maintained a 19 percent tariff on certain Thai products, with negotiations aimed at identifying goods where tariffs could be adjusted or removed. Thailand plays a crucial role in the global photovoltaic (PV) market and serves as a key manufacturing hub, particularly for Chinese firms trying to avoid high U.S. tariffs on modules produced in China. In 2023, Thailand was the fourth-largest exporter of solar panels worldwide, with over 75 percent of its exports typically going to the U.S.

The current geopolitical tension adds to a larger and ongoing trade challenge. Thailand is already facing high preliminary U.S. anti-dumping and countervailing duties (AD/CVD) on solar products, in some cases exceeding 375 percent. These duties target Southeast Asian manufacturers accused of benefiting from Chinese subsidies and dumping practices. Such extreme tariffs have forced some solar companies operating in Thailand to stop exports or even move operations abroad, raising the price floor for solar components.

The trade uncertainty also affects investment in Thailand’s solar sector. Instability caused by sudden negotiation halts and tit-for-tat trade measures discourages foreign direct investment. Global manufacturers and project developers need long-term policy predictability, and any risk that political issues could disrupt trade stability makes Thailand a less attractive destination for next-generation solar manufacturing or large-scale project development.

Although Thailand’s solar industry is primarily export-focused, the country is also trying to reduce its dependence on imported natural gas. The revised Power Development Plan aims for over 50 gigawatts of renewable energy capacity by 2037. In theory, if trade barriers limit exports, the resulting increase in domestic supply could lower component prices within Thailand and accelerate local solar deployment. However, severe trade disruptions could negatively impact the industrial ecosystem, including the availability of essential balance-of-system components and high-quality modules for domestic use.

The recent suspension of trade negotiations highlights the importance for Thai solar manufacturers to diversify their export markets beyond the U.S. and for the government to create stronger incentives for domestic consumption. Long-term resilience in Thailand’s solar sector depends not only on resolving this particular Cambodia-related trade issue but also on establishing stable, predictable trade relations with the United States while simultaneously strengthening the domestic clean energy market to absorb production and reduce vulnerability to future export-driven volatility.

This situation underscores that non-energy geopolitical factors can significantly influence renewable energy growth, and Thailand’s solar industry must navigate both international trade challenges and domestic development goals to sustain its position in the global market.