Assessing the Potential Impact of Tariffs on Clean Energy Stocks

This analysis was originally published as a stock note by Morningstar Equity Research.

On April 2, 2025, the US government imposed widespread tariffs consisting of a 10% universal tariff on all imported goods as well as country-specific tariffs. The universal tariff goes into effect on April 5, while country-specific tariffs are slated to take effect on April 9.

Why it matters: The tariffs are expected to affect manufacturers across our coverage list, including items such as solar panels and electrical equipment.

• For solar, the industry has made significant progress in reshoring manufacturing to the US following the Inflation Reduction Act, but imports of items such as solar panels remain, especially for the upstream portion of the value chain (solar cells).
• For electrical equipment, the industry is relatively more US-manufacturing-centric, with much non-US capacity residing in Canada and Mexico. Critically, Canada and Mexico have been exempt (for now) from country-specific tariffs through the United States-Mexico-Canada Agreement.

The bottom line: We are maintaining our fair value estimates across our clean energy coverage as we continue to assess the situation. While we see potential impacts should the tariffs go into effect, the longevity of the tariffs remains a key question.

• We think investors should take advantage of the selloff in names such as narrow-moat Acuity and Generac, as well as no-moat First Solar.

Tariff Impact on Select Clean Energy Stocks

Below, we highlight manufacturing operations for select companies in our coverage.

First Solar (FSLR): 55% of manufacturing capacity is in the US, 15% is in India, 15% in Malaysia, and 15% in Vietnam.

Enphase Energy (ENPH): 85% of microinverters are made in the US, the remainder from China and India.

Acuity (AYI): 55% of lighting products come from Mexico, 20%-25% from Asia, and 20%-25% US.

GE Vernova (GEV): Roughly 5% of materials being imported to the US are from Canada, Mexico, and China.

Generac (GNRC): Mexico and Canada exposure, but China imports are limited. The supply chain is heavily intertwined with the automotive industry, given the crossover in technology (internal combustion engine).

nVent Electric (NVT): Property, plant, and equipment breakout is 60%-65% US, 10%-15% Mexico, 20%-25% Europe, the Middle East, and Africa, and 5% other.