Trump’s chip supply chain shield could backfire in Tennessee

The Trump administration’s plan to protect America’s semiconductor supply chain has a problem. It’s destroying a piece of that supply chain in real time.

Wacker Chemie, the German chemical giant, is weighing the closure of its polysilicon plant in Charleston, Tennessee, after trade measures introduced on August 6 drove away the facility’s last two remaining customers. The plant employs roughly 600 workers, and their jobs now hang on a decision the company says it will make in the coming weeks.

The tariff trap

The trade measures in question fall under Section 232, the national security provision the administration has wielded repeatedly to reshape global trade flows. For polysilicon and related semiconductor inputs, the new rules impose a 15% tariff alongside price floors: $21 per kilogram for polysilicon and $100 for ingots and wafers, with the price floors set to take effect in December 2026.

The intent is straightforward enough. China dominates global polysilicon production, and Washington wants to reduce that dependency by making foreign material more expensive. In theory, domestic producers should benefit as buyers look for alternatives closer to home.

In practice, the opposite happened at Wacker’s Tennessee facility.

The tariffs and price floors didn’t just raise costs on Chinese imports. They raised costs across the entire value chain, making it more expensive for Wacker’s customers to buy polysilicon from anyone, including a plant sitting on American soil. Both of the facility’s remaining customers walked, presumably finding the new cost structure unworkable for their own margins.

Wacker CEO Christian Hartel has been blunt about the outcome. He’s said publicly that the measures fail to provide meaningful support for US-produced polysilicon. That’s a notable statement from a company that would, in theory, be a direct beneficiary of policies designed to boost domestic production.

A supply chain paradox

Polysilicon sits at the base of two industries the US government considers strategically important: semiconductors and solar energy. Every chip in every phone, server, and fighter jet traces part of its lineage back to this material. So does every solar panel.

The US has been losing ground in polysilicon manufacturing for years. Excess global capacity, driven largely by massive Chinese investment, has pushed prices down and squeezed Western producers. Wacker’s Charleston plant has already been reducing personnel before the latest trade measures landed the final blow.

Section 232 actions are explicitly justified on national security grounds. The argument is that the US cannot afford to depend on adversarial nations for critical materials. But if the Wacker plant closes, America will have even less domestic polysilicon capacity than it did before the tariffs were imposed.

The broader stakes

The CHIPS Act, passed in 2022, poured tens of billions of dollars into incentivizing domestic semiconductor manufacturing. Major chipmakers have announced new US fabrication plants. But those fabs will need inputs, and polysilicon is among the most fundamental.

For now, Wacker says it’s evaluating its options. But when your last two customers have already left, the range of viable options tends to be narrow.