Global markets are still responding to the sweeping tariffs President Donald Trump announced yesterday as part of his so-called “Liberation Day.” The tariffs include levies of at least 10% on almost every country — with some countries facing much higher rates.
The U.S. stock market is reeling, with the S&P 500 index down more than 4% as of opening Thursday morning. International stock markets from London to Germany to Japan are also down.
Though oil imports were exempted from the tariffs, they are still hitting the energy sector particularly hard. Oil prices dropped on Thursday, thanks to fears of a widespread slowdown in global economic growth that would likely impact demand for energy generally.
And the tariffs are also expected to raise the cost of building clean energy in the U.S. — which could in turn raise electricity prices. This comes at a time when demand for energy to power data centers in particular is soaring, and the sector needs every electron it can get its hands on.
Chinese imports now face 54% tariffs when all existing levies are taken into account, and Chinese solar panels specifically are still subject to the tariffs former President Joe Biden imposed last year. China is the top exporter of lithium-ion batteries to the U.S., and also supplies key grid equipment. But in recent years the country has also been exporting its equipment to middle and lower income countries — and BloombergNEF’s head of supply chains and trade Antoine Vagneur-Jones told Bloomberg that the trend is now expected to accelerate.
Solar panel imports from outside China are also facing steep tariffs. Vietnam, the top supplier of solar panels to the U.S., faces a 46% tariff. Cambodia is looking at 49% tariffs, and Thailand 36%.
Steel and aluminum, key components of clean energy infrastructure, are exempt from the new tariffs, though the commodities are already subject to a 25% tariff that Trump increased and expanded just last month.
Compounding risks
Mexico and Canada were also exempted from Wednesday’s baseline 10% tariffs. The 25% tariffs Trump imposed in March on the two countries — which import large quantities of batteries, grid converters, transformers, and conductors as well as some solar modules into the U.S. — are still in place, though there is a carveout for goods that are compliant with the USMCA, the 2020 update to NAFTA.
Canadian energy resources, including electricity flowing cross-border, are subject to a lower, 10% rate. In response, the premier of Ontario initially said the province will cut off electricity exports to the U.S. entirely; he has since softened that to a 25% export tax.
Costas Samaras, director of Carnegie Mellon’s Scott Institute for Energy Innovation, told Latitude Media last month that it’s important to understand the escalating trade war in the broader context of the Trump administration’s efforts to reduce the competitiveness of clean energy.
“You have tariffs, plus the potential repeal of portions of the IRA, or potential other actions that make specific clean energy technologies less competitive,” Samaras said. “These are compounding risks to an important and emerging industry in the United States.”
As a result, many clean energy and climate tech companies are beginning to look elsewhere for the policy certainty that they need. For instance, Canada is seeing a surge of interest in building direct air capture facilities.
