First Solar has joined a growing collection of companies during first-quarter 2025 earnings calls that have adjusted guidance to account for economic uncertainty related to President Donald Trump’s trade war and tariffs.

The U.S.-based solar panel manufacturer’s concerns include the budget reconciliation process and its impact on the Inflation Reduction Act (IRA).

Steps taken by Trump to fulfill his U.S. energy dominance agenda and add money to federal coffers have kept company executives searching for ways to mitigate potential risks while working to meet growing energy needs and protecting value for shareholders. For solar companies operating in the U.S., tariffs on solar panels could boost domestic manufacturing and create jobs. However, they could also result in higher prices, potentially stifling what today is the fastest-growing source of electricity generation.

“Despite these near-term challenges, we believe on balance, the political and trade environment continues to be an overall long-term favorable from a First Solar perspective,” First Solar CEO Mark Widnar said April 29 on an earnings call. “While the implementation of certain new trade policies was a possibility with the change in administration, the new tariff regime impose[d] earlier this month has introduced significant challenges to 2025 that were not known at the start of the year.”

The regime includes the 10% universal tariff, assuming it remains in place throughout the year.

Revised guidance

First Solar said it expects 2025 net sales between $4.5 billion and $5.5 billion, compared to its previous estimate of $5.3 billion to $5.8 billion. Forecasted earnings also were revised down to between $12.50 and $17.50 per share, compared with its previous forecast of $17 to $20 per share.

Module sales for the year are now expected to be between 15.5 gigawatts (GW) and 19.3 GW, down from 18 GW to 20 GW. Slight revisions were also made to planned capex, which dipped to $1 billion—from $1.3 billion—on the low end. The upper end was unchanged at $1.5 billion.

In addition to its U.S. facilities, First Solar makes products in India, which serves that country’s and U.S. markets, and in Malaysia and Vietnam, which almost exclusively serve the U.S. market.

“The president’s implementation of reciprocal tariffs earlier this month with rates of 26%, 24%, and 46% applicable to India, Malaysia and Vietnam respectively creates a significant economic headwind for our manufacturing facilities in these countries selling into the U.S. market,” Widmar said. “While the subsequent 90-day pause to the effectiveness of these tariffs and the application of a 10% universal tariff partially mitigates the impact, the lower rate would still result in a meaningful adverse gross margin impact to sales into the United States, absent the duty being fully passed through to the module buyer.”

Not knowing whether the reciprocal tariffs would be put in play after the pause has also made it difficult for First Solar to quantify the tariff rate that would be applied to its module shipments in the second half of 2025, he said.

Of the company’s overall 66.3 GW backlog as of the end of March 2025, about 13.9 GW comes from production outside of the U.S. The company plans to steer its India facility away from exports to the U.S. and instead serve the market in India. Options are still being evaluated for production in its Malaysia and Vietnam factories.

“After accounting for the remaining volume sold in 2025 at the low end of our revised guidance range…, there remains a forecasted year-end net 12 gigawatts of international product in the backlog that may be terminated based on these tariff-related provisions,” he said.

Options open

First Solar has provisions in its contracts to mitigate margin impacts from changes in law due to the implementation of tariffs on modules, Widmar said.

Options include terminating the contract if the company chooses not to absorb the new tariffs. In other instances, the customer may be required to absorb the tariff, or the two may opt to share the expense up to a certain amount.

“If the contract is terminated on the basis of these provisions, the agreement would effectively unwind with neither the customer nor First Solar being responsible for a termination payment, resulting in a corresponding reduction to our backlog, as well as a return to the customer of any related deposits,” Widmar explained. “These provisions are intended to protect First Solar in the event of changes in law related to tariffs that pose significant economic risk to us and that could otherwise force First Solar to transact at a loss.”

Jefferies analysts said the management commentary sends a strong message to First Solar’s customers. In an April 30 note, the analysts asked “Who has the upper hand in determining what an appropriate sharing mechanism should be? Are customers willing to lose out on volumes for delivery in ’26 and risk their whole project? Will they have enough time to procure panels elsewhere?”

The analysts noted First Solar seems to be a “strong negotiating position” and appears willing to sacrifice margins.

In addition to the tariffs, company executives said the budget reconciliation process unfolding in Congress and its impact on the IRA, including investment tax credits (ITC) and production tax credits (PTC), is also creating near-term uncertainty.

“We are pleased to see a growing number of Republican policymakers in both the House and the Senate recognize the value of preserving existing tax credits such as 45X and the ITC and PTC,” Widmar said. “We recognize that these incentives help, in their words, spur new manufacturing investment and ensure certainty for businesses that have already made meaningful U.S. investments. They also recognize that doing so would reduce utility bills for American consumers.”

Income down, sales up

Widmar later added that if the company absorbs the tariff costs, no termination rights exist and the volume remains in its backlog. “With respect to our module contracts for delivery of product from our U.S. facilities, module tariffs are not applicable and therefore it is not impacted to our contracted backlog with respect to this volume.”

Despite the near-term challenges, the company called demand in its core U.S. market strong.

“This belief is based on our unique profile of First Solar compared to its peers. We are the only U.S.-headquartered PV manufacturer of scale,” Widmar said, “and by the end of this year, we will be the only one with a fully vertically integrated U.S. solar manufacturing presence across three states, including a large domestic supply chain, not just in Ohio, Alabama and Louisiana, but across states such as Wyoming, Utah, Indiana, Illinois, Michigan and Pennsylvania among others.”

The company’s Louisiana manufacturing facility is on track to begin commercial operations in the second half of this year. Widmar said construction of the building is complete, and equipment installation and commissioning are underway. The Louisiana site is expected to lift First Solar’s nameplate manufacturing capacity in the U.S. to more than 14 GW by 2026.

First Solar reported a net income of $209.5 million for first-quarter 2025, down about 11.4% from the $236.6 million reported a year earlier. Net sales for the quarter were $844.6 million, up 6.4% compared to first-quarter 2024.