Trump's trade war with China threatens these key green technologies

Business Times

a day ago

[NEW YORK] As the US-China tariff truce fast approaches its current deadline of Aug 12, businesses on both sides of the Pacific Ocean are holding their breath. US President Donald Trump's reciprocal tariffs, if imposed, would bleed Chinese exporters. They would also deal a fresh blow to an already troubled US climate tech industry, experts said.
America's battery installers and developers stand to lose the most, said Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF (BNEF). China dominates the export of lithium-ion batteries and battery materials to the US, and supply chains cannot be quickly altered to change that.
Here's how tariffs would affect batteries and other clean technologies:
Utility batteries
For every five lithium-ion batteries the US imported over the first five months of this year, three of them came from China, according to BNEF's analysis. That share is even higher for lithium iron phosphate batteries, which are widely used by utilities.
'This will definitely impact the battery storage market' in the US, said Tom Moerenhout, a professor at Columbia University who studies policy, economics and climate technologies. As battery deployment plays a vital role in helping smooth the intermittent nature of renewable energy, 'this will inevitably slow down the energy transition', Moerenhout said.
Tariffs on utility-scale batteries made in China already stand at nearly 41 per cent. Countries such as South Korea can offer an alternative, but batteries made there are pricier than their Chinese counterparts. Trump has also slapped a 15 per cent levy across the board on imports from South Korea, further raising the price for any would-be importers.
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While the US has started to develop its domestic battery supply chain, building it out will take time, Vagneur-Jones said. The battery makers that are operating in the US will also be hit by Trump's trade war, which could weaken their ability to increase production.
Companies such as LG Energy Solution and Fluence Energy have invested heavily in expanding their manufacturing capacity, but American-made batteries rely on imported components, including battery cathodes and anodes, many of which are traditionally sourced from China.
Rare earth minerals
China also has a stranglehold on another part of the US clean tech supply chain: rare earths. The Asian nation mines more rare earth minerals than any other country and controls roughly 90 per cent of the global refining capacity.
While the Trump administration has largely exempted rare earth imports from tariffs, Beijing introduced export controls in early April on several strategic materials and related products as part of its retaliation to Trump's reciprocal tariffs.
The supply chain disruption wreaked havoc on various US industries. Automaker Ford, for example, was forced to temporarily shut down one of its factories in May due to the difficulty of obtaining rare-earth magnets, which power everything from seats to audio systems and windshield wipers. It was not until Jun 11, when the two countries agreed on a new trade framework, that China resumed regular exports of rare earths to US companies. It's unclear whether the export curb would return if the trade negotiation falls apart.
'Rare earths are a bargaining chip between China and the United States,' said Grant Hauber, a supply chain specialist at the Institute for Energy Economics and Financial Analysis, a think tank. 'Because policy decisions have been so erratic, you can't take anything off the table.'
Many US climate tech manufacturers would take a hit if Beijing once again weaponises rare earths. Neodymium magnets, one of the components that are included on China's export restriction list, for example, are critical for electric vehicle motors. The material is also commonly used in wind turbines.
Long-term effects
This comes against the backdrop of Trump killing government support for a wide swath of emissions-cutting technologies, with a particular focus on electric vehicles and wind farms. The renewables industry has been taken aback by how widespread the attacks have been, and that's been reflected in the growing number of project cancellations.
In the first half of 2025, companies cancelled, closed or scaled back US-based green projects worth more than US$22 billion, according to research group E2. That was before Trump signed a tax law wiping out clean tech incentives, and the latest round of tariffs took effect.
American and Chinese negotiators wrapped up their third round of high-level trade talks late last month in Stockholm, without inking any agreement. That has raised doubts over whether the world's two largest economies will be able to strike a deal before Aug 12.
While Trump said last week that the two countries will likely agree to extend their tariff truce, experts worry that a prolonged trade negotiation could hurt the US climate tech advancement.
'The golden rule in business is stability,' Hauber said. 'When you aggregate this volatility and change of decisions and guidance, most people just said: 'I'm going to wait.'' BLOOMBERG