(Not So) Fun Fact: The Trump Administration has taken equity stakes in 31 private companies at a cost to taxpayers of approximately $28 billion, marking an uncharted approach to industrial policy by the U.S. government.

What the MIP? Polysilicon Tariffs and Price Floors

What’s Happening: On August 6, the White House announced both 15-percent tariffs and price floors for certain polysilicon imports beginning December 4 of this year. Intended to blunt foreign competition, the new import price controls – known as minimum import prices (MIPs) – for solar cells, solar modules, polysilicon wafers, and polysilicon ingots mark the first time President Trump has opted to use such a tool in addition to tariffs. These latest trade measures fall under Section 232 of the Trade Expansion Act of 1962, a tariff authority that allows the president to adjust imports in the name of national security. The administration argues that polysilicon is essential to defense systems and nearly all digital products and that the decline in U.S. production capacity is due to “global oversupply” – which represents a threat. A Section 232 investigation into polysilicon was first initiated in July 2025 and comes in addition to multiple other Section 232 tariffs on steel, aluminum, copper, semiconductors, pharmaceuticals, lumber, furniture, coal, wind turbines, and automobiles. The polysilicon Section 232 tariffs coupled with MIPs will effectively replace and expand upon the previous Section 201 safeguard tariff on solar cells, which expired in February. These safeguard tariffs were initially put in place in 2018 during President Trump’s first term, were extended during the Biden Administration, and finally lapsed this year. Notably, the White House specifies that countries with which it has reached trade deals will receive preferential tariff rates, including a 10-percent rate for the United Kingdom (UK) and a 15-percent cap for Japan, South Korea, Taiwan, Switzerland, Liechtenstein, and the European Union (EU) – meaning other tariffs will not stack on this Section 232 tariff.

Why It Matters: The polysilicon MIPs and tariffs represent the latest in a long line of protectionist actions – specifically those in the name of national security – taken by the Trump Administration. Although there is precedence for the Section 232 authority, this action represents a clear break from past tariffs because it introduces a price floor mechanism. Importers must submit documentation upon entry that certifies a “first arm’s length sale” will take place at or above the relevant MIP. If an importer fails to provide this information or the submitted value is less than the MIP, then the import will be subject to a specific tariff that raises the price to hit the MIP. For example, a U.S. company might purchase polysilicon wafers from a foreign producer for $40 per kilogram – well below the $100 price floor – then sell to a U.S. customer for $100, meeting the MIP and exempting the company from any MIP-related price adjustment. The same company would still face an up to 15-percent tariff on the $40 import value. Let’s take another example where a company imports wafers for $40 per kilogram and plans to sell to a U.S. customer for $50. This company would face a $50 MIP-related tariff to raise the price to the $100 price floor and would also have to pay an up to 15-percent tariff on the import value. The MIP mechanism for polysilicon products therefore acts as a domestic price floor because it applies to the prices for U.S. customers rather than solely import prices for U.S. importers. Companies may qualify for exemptions if they have investment or onshoring plans approved by the Trump Administration. Notably, this Section 232 proclamation may also set a dangerous new precedent for companies that attempt to stockpile ahead of time, as it states that Customs and Border Protection can restrict imports of any company that the administration believes to be doing so.

The overall economic impact of this Section 232 action will depend heavily on whether most companies can provide documentation of U.S. sales, as these prices will almost certainly be higher than import prices. Even if a company’s domestic sales are not at or above the MIP, a higher sale price reduces the MIP-related tariff it would otherwise have to pay. If most domestic sales already occur above the MIP, then the economic impact will be minimal, but the price floor will prohibit the free market from properly functioning. MIPs will create a protective blanket for domestic producers by essentially locking in a price floor, but MIPs also eliminate the possibility of U.S. consumer prices falling over time. It is difficult to determine the precise impact MIPs will have as comparing Harmonized Tariff Schedule (HTS) codes to U.S. sales figures is not a 1-to-1 comparison and domestic prices vary by company and region. Median U.S. solar module prices in Q1 2026 were $0.28 per watt, which is below the $0.38 per watt MIP for solar modules. On the other hand, raw polysilicon and wafer prices appear to be above the MIP. After examining import price data for seven HTS codes, the Shipment found that only three – encompassing solar cells and solar modules – had prices below their respective MIP. The Shipment estimates that the total MIP-related tariff costs for these imports could amount to $2.6 billion using current 2026 import trends and price data or as much as $4.2 billion if 2025 import flows are replicated with 2026 prices. Given that imports of these products amounted to roughly $9 billion in 2025 and are on track to be around $8 billion for 2026, these MIPs could significantly raise downstream costs for U.S. consumers and businesses. In addition to the uncertainty surrounding MIP costs, the Shipment estimates that the 15-percent tariff amounts to between $635–$870 million in annual costs depending on the trajectory of trade flows.

Looking Ahead: There are still more than three months before the polysilicon Section 232 action takes effect, meaning companies and consumers have some time to prepare for the economic impact. The Shipment will pay close attention – alongside the Trump trade team, presumably – to monthly imports of impacted polysilicon products in the lead up to December 4 to see whether companies risk front-loading imports given the administration’s threat to crack down on stockpiling. It is highly possible that the use of MIPs continues in other sectors of the U.S. economy going forward as the Trump Administration has long hinted at applying price floors to critical minerals.

In Other News

Government Stakes in Private Companies: After discussing trade barriers and price controls, let’s discuss another anti-capitalist concept: government ownership of private companies. Specifically, the Trump Administration has taken equity stakes in 31 companies across a whole host of sectors ranging from critical minerals to semiconductors. As of mid-August, the federal government has invested $28 billion in 37 separate deals that involve warrants, price floors, grants, loans, and most commonly direct ownership of U.S. companies. Recently, the U.S. Export-Import Bank announced $58 million in lending to three critical mineral companies, focusing on graphite, niobium, tantalum, and boron in a bid to reduce reliance on China. This comes after late July’s announcement of nearly $900 million in incentives for seven AI/chip companies in exchange for equity and May’s $2-billion investment in nine quantum computing companies. The trend shows no signs of slowing down, as rumors abound that more critical mineral, defense, and nuclear companies will soon enter the government’s portfolio. Recent polling suggests government ownership of U.S. companies is not a popular economic policy. According to a CNBC poll, 49 percent of voters say it is not appropriate for the federal government to own U.S. companies compared to 19 percent that say it is. Similarly, an Economist/YouGov poll shows that 58 percent of Americans think government ownership in U.S. companies is a bad idea compared to just 11 percent who think it is a good idea. Break that down further and you find that 71 percent of liberals, 59 percent of moderates, and 50 percent of conservatives (hmmm…) disapprove, a troubling look with midterms only a few months away.

Uh Oh, Pecans: The hot and cold U.S.-China trade war is heating back up as China announced it will be imposing tariffs on pecans from both the United States and Mexico. According to China’s Ministry of Commerce, this action is in response to alleged dumping that has caused “substantial damage” to the Chinese pecan industry. Most of China’s imports from Mexico – amounting to around $19 million in 2025 – will face a 22.2-percent tariff, although some companies face a rate from 17.8–51.6 percent. Pecans from the United States on the other hand will face a flat 54.3-percent tariff, with total exports to China totaling close to $12 million according to Chinese trade data. Combined, both countries represent a little over 10 percent of all Chinese pecan imports. Notably, Mexico has been caught in the crossfire because it is one of the few countries that has worked with the United States on creating a North American barrier against Chinese imports. Recall, Mexico approved tariffs of between 5–50 percent on more than 1,400 products from countries it has no trade agreement with, including China. The pecan protections may signal resurgent retaliation from China while also acting as a catalyst for bringing U.S.-Mexico trade relations closer together. Meanwhile, Canada has been left out of the action as the country has chosen a far softer stance on trade with China and continues to see minimal trade negotiation progress with the Trump Administration.