27-05-2025
Behind Trump's Tariffs: A Hidden Opportunity For Clean Tech?
Car Import Tariff and Economic Recession
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Within months of each other, both Donald Trump and Ursula von der Leyen began their second terms as President of the United States and President of the European Commission, respectively. As they embark on new political chapters, their economic divergence is casting a long shadow over the future of clean tech.
Under President Trump's renewed leadership, the U.S. has pivoted away from climate action, turning back to oil and gas. Meanwhile, nearly every link in the international supply chain is now tangled in tariffs, prompting swift retaliatory measures from Canada and China. Once-stable trade relationships are now marked by uncertainty and geopolitical tension.
Still, the outlook for technology development remains bright. The global economy is growing more diversified, perhaps because, and not despite, different regions pursuing divergent approaches to prosperity. The U.S. is doubling down on access to critical minerals and spearheading AI innovation; the EU remains a beacon of climate leadership; China continues its trajectory of unprecedented levels of renewable buildout and manufacturing capacities; and emerging economies across Africa and South America are asserting their place in the global value chain.
Despite rising tensions, each region is vying for leadership in the technologies that will define the next economic and industrial era – hinting that behind the tariffs, there may lie a hidden opportunity for clean tech to scale, compete, and thrive.
The U.S. trade conflict reflects a high-risk strategy to reshape economic terms in the region's favor. While criticizing clean tech, the Trump Administration has actively championed investment in Artificial Intelligence.
Silicon Valley Bank recently reported that 40% of U.S. venture capital in 2024 was directed toward AI, up from just 10% in 2021, a trend expected to continue, with Trump attracting massive AI investments from all over the world.
Often dismissed in climate circles, AI actually holds massive potential for climate mitigation through efficiency gains across sectors. In this sense, attracting AI infrastructure investment can be seen as climate action in disguise.
Similarly, Trump's negotiation with President Zelenskyy, while controversial, led to the U.S.-Ukraine Minerals Deal, a strategic win in diversifying upstream supply chains for technology components currently dominated by China. Despite the optics, this too is a climate-relevant outcome.
However, such wins exist within a broader context of economic fragility.
Quarry with mineral resources and flag of Ukraine
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Originally designed to protect nascent industries, tariffs without complementary tools such as innovation funding, workforce development, and infrastructure investment often do more harm than good.
So, while it is true that the U.S., similar to the EU, is too dependent on imports, the same can be said for exports. For example, in 2024, China supplied 70 percent of all lithium-ion batteries consumed in the U.S. On the flipside, major U.S. states like Texas, California, New York, Illinois, Indiana, Louisiana, and Michigan each export over $30 billion annually to Chinese, Canadian, and EU markets. These states are now on the frontlines of potential reciprocal tariffs.
Still, Trump's tariff strategy, albeit blunt, does have a goal: to reignite domestic industries like steel and auto manufacturing. But without a long-term plan for sustainable growth, the policy risks turning inward at a moment when global cooperation is essential.
The contrast with Biden's approach is stark. The Inflation Reduction Act (IRA) showcased how policy can attract investors and manufacturers while being coupled with targeted tariffs and support mechanisms like the CHIPS Act. Between Q3 2022 and Q1 2025, a total of 380 clean technology manufacturing facilities were announced, nearly half of which were operational as of March 31 2025. This represents a five-fold increase in investments in clean manufacturing, from $2.5 billion in Q3 2022 to $14 billion in Q1 2025.
Yet, due to the Trump Administration's funding freeze, combined with its approach to tariffs, a total of $6.9 billion of investments were cancelled – the highest value of quarterly cancellations on record. What's more, the new budget bill which passed the House of Representatives, could effectively halt the US clean energy manufacturing boom.
The irony here should not be overlooked. Of the $289 billion invested in the clean tech manufacturing facilities, 77% went to Republican led districts. Thus, they have become the biggest beneficiaries of clean energy investment. And since President Trump is well known for being a dealmaker, renewable energy – with its falling costs and growing strategic importance – may well turn out to be the best deal on offer.
While U.S. policy undergoes significant overhaul, the EU has spent decades preparing for a sustainable economic transition. That preparation has sometimes been a challenge for industry, but it has also laid solid groundwork. Decarbonization targets are binding. Renewable energy deployment is accelerating. Emissions are priced through the ETS. And carbon leakage is being addressed via the Carbon Border Adjustment Mechanism (CBAM).
Now, the EU is aligning trade and climate goals, using tools like carbon pricing to create a level playing field without isolating itself.
For U.S.-based investors and innovators navigating political unpredictability at home, Europe increasingly stands out as a stable, rules-based market with long-term industrial clarity.
Europe's deliberative policymaking offers something rare in today's climate: predictability. Combined with a cooperative stance toward China, the U.S., and emerging blocs like Mercosur and the African Union, the EU remains a pragmatic and reliable partner.
At the same time, behind the smokescreen of U.S. tariffs and retaliatory measures lies an unexpected upside. In the race to reshape supply chains, secure resources, and dominate future-defining technologies, climate progress may emerge not despite geopolitical tensions, but because of them.
If the moment is seized, today's fragmentation could catalyze a more resilient, decentralized clean tech economy. One built not on ideology, but on common interests, cooperation, and global interdependence.
