Planning for Stability to Minimize Tariff Impacts

Each time you try to procure solar modules, inverters, or battery energy storage equipment, you are at risk.

Import tariffs can be the root cause, and they can put your projects at risk of cost overruns, timeline delays, and other complications. Understanding tariffs and their impacts allows you to manage risk proactively and plan for stability, even when in dynamic markets.

Tariffs, a primer

A tariff is a tax collected at the port of entry where international goods cross the border into the domestic market. These may include standard tariffs applied broadly across a wide variety of imports, and reciprocal tariffs aimed at certain goods from certain countries. 

Tariffs have existed for specific reasons throughout U.S. history. Following the Revolutionary War, tariffs generated revenue to help repay war debts at a time when citizens paid no income, property, or sales tax. As industrialization expanded domestic manufacturing capacity and the U.S. became a net exporter, income tax replaced tariffs as the primary source of federal revenue. 

After World War I, U.S. trade policy shifted toward influencing behavior on the world stage rather than generating revenue. That era of reciprocity continues today, with tariffs functioning as a strategic tool for reshaping global supply chains and trade relationships.

Because a tariff is a tax, it is important to understand what is taxable and what is not. Tariffs apply to goods, but not to services or software, nor do they apply to seller profit margins, warranty extensions, or operations and maintenance (O&M) agreements. 

When tariff impacts are clearly defined, organizations can calculate costs more precisely, and build strategies to increase agility and minimize exposure.

Consider a $1 million SCADA (Supervisory Control and Data Acquisition) system implementation at a large-scale solar power plant. Although the full project scope costs $1 million, a harmonized tariff schedule may reveal that only $200,000 of equipment carries tariff exposure. When importing from a country subject to a 25 percent tariff, that distinction can mean budgeting an additional $50,000 rather than $250,000, an outcome that can materially affect project economics.

Two of the most important steps you can take to minimize tariff impacts are to work with seasoned procurement professionals and to create an agile and diversified supply chain.

Work with procurement professionals

Procurement professionals help monitor developments in the tariff market and guide strategies to reduce exposure. Start by engaging legal counsel to stay abreast of tariff policy changes. Agreements should clearly define how costs will be shared if tariff rates increase during the contract term, and specify which items are tariff applicable and subject to documentation requirements. Aligning expectations among clients, suppliers, and internal teams helps reduce audit risk.

When classifying equipment, use a harmonized tariff schedule that separates tariff-applicable items from exempt items. Carefully document how tariff values are calculated, including country of origin and where substantial completion occurred. In some cases, substantial completion outside the country of origin may reduce tariff exposure.

Close coordination between legal, supply chain management, and compliance teams is essential. These teams can calculate tariff impacts based on qualifying equipment costs rather than total project value, maintain detailed records of origin and landed costs, and ensure contractual protections are in place if tariffs change during a project.

Create an agile and diversified supply chain

With procurement professionals monitoring tariffs and managing documentation, organizations are better positioned to navigate today’s global energy markets. The next step is implementing a risk mitigation plan that ensures supply chain partners can support efforts to minimize tariff impacts. This plan should include supplier audits, documentation systems, capacity planning, and diversified sourcing strategies.

Audit suppliers and agreements: These determine whether suppliers can pivot quickly if tariff conditions change during project execution. Ensure that all parties agree on tariff compliance, including interpretations of tariff applicability and documentation standards, as misalignment can increase audit risk.

Set up documentation systems: For each component entering the U.S., maintain comprehensive records throughout the supply chain to support accurate tariff calculations and audit compliance. Proper documentation avoids inflated costs on non-qualifying components and eliminates uncertainty around true tariff exposure.

Capacity planning: Forecasting helps organizations plan for changes in supply, demand, and pricing tied to tariffs. Review existing agreements to ensure supplier and client commitments remain sustainable if market conditions shift. Working with suppliers who maintain volume commitments and understand long-term capacity constraints is critical. 

Diversify nearshore sourcing: Relying on a single country for sourcing exposes supply chains to significant risk. Diversifying across multiple regions — including Asia, Europe, and the Americas — helps mitigate exposure. Additional risk reduction can be achieved by sourcing domestic content in the U.S. or in countries with free trade agreements. 

Creating stability

In uncertain times, change is inevitable. By understanding what tariffs are and the behaviors they are designed to influence, organizations can mitigate risk, strengthen procurement strategies, and create stability to the greatest extent possible within their own operations.

Edward Fernandez, MBA, is Senior Vice President and Head of Supply Chain Management at Qcells EPC, where he leads procurement, subcontracting, logistics, and inventory strategy for utility-scale solar and energy storage projects. He brings 28 years of experience in the energy industry, including 16 years in renewables, with a career rooted in both finance and supply chain leadership.

Qcells EPC | us.qcells.com/epc