Trump's Polysilicon Tariffs Could Reshape These ETFs

Tariffs Target China’s Supply-Chain Dominance

Polysilicon is a crucial input for solar panels and semiconductor manufacturing. China currently dominates global polysilicon production, and, hence, has significant influence over the renewable-energy and technology supply chains.

The new U.S. tariffs are part of a broader effort to shift strategic manufacturing away from China. The administration is also seeking to strengthen domestic capacity in industries such as semiconductors, wind turbines and robotics.

However, the tariffs will not take effect until Dec. 4, 2026, giving companies and investors several months to adjust their supply chains. The delayed implementation could also limit the immediate earnings impact on U.S. manufacturers and solar companies.

ETFs in Focus

At the initial level, the effects of polysilicon tariffs are likely to be negative on earnings of some of the S&P 500 sectors. However, smaller-cap U.S. companies may benefit from the move. 

In a nutshell, U.S.-focused solar and semiconductor manufacturers may benefit from stronger domestic protection and investment, while companies dependent on imported polysilicon, wafers and solar components could face higher import and input costs.

Semiconductor ETFs

The Trump administration is particularly focused on increasing U.S. semiconductor production as demand for chips rises alongside artificial intelligence infrastructure. Domestic semiconductor manufacturers could benefit if the tariffs accelerate investment in U.S.-based supply chains. But higher material costs could pressure chipmakers.

VanEck Semiconductor ETF SMH gives investors concentrated exposure to the semiconductor industry.

SMH has assets under management worth $71.10 billion and an expense ratio of 0.35%. The fund trades at an average daily volume of almost 12 million shares. SMH presently flaunts a Zacks ETF Rank #1 (Strong Buy). 

iShares Semiconductor ETF SOXX is a semiconductor-focused ETF that provides exposure to companies across the semiconductor value chain, including chipmakers and semiconductor-equipment manufacturers.

SOXX has assets under management worth $46.41 billion and an expense ratio of 0.33%. The fund trades at an average daily volume of 10.56 million shares. SOXX presently sports a Zacks ETF Rank #1. 

Solar ETFs

Solar ETFs provide diversified exposure to companies involved in solar equipment, panels and renewable-energy projects that might be impacted by this policy.

Invesco Solar ETF TAN is a focused solar-energy ETF that gives investors exposure to companies involved in the global solar power industry. It tracks the MAC Global Solar Energy Index.

TAN has assets under management worth $1.40 billion and an expense ratio of 0.70%. The fund trades at an average daily volume of 1.47 million shares. TAN presently carries a Zacks ETF Rank #4 (Sell).

Note that the TAN ETF has considerable exposure to smaller-cap stocks, which are domestically focused and may benefit from the latest tariff move.

Boost Your Portfolio with Our Top ETF Insights

Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.

Don’t miss out on this valuable resource. It’s free!

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research