Battery energy storage was, unsurprisingly, not a key element of President Donald Trump’s day one agenda. But his proposed trade policies have the potential to reshape global battery supply chains — and to off the current trajectory of domestic manufacturing.
New research by Clean Energy Associates estimates that Trump 2.0 policies could drive up costs for battery storage systems by more than 35%.
Released last week, the reports outline “multiple layers of policy risk” for energy storage imports, starting as early as February.
Among the most likely policy risks is that the new administration will increase the existing Section 301 tariffs against Chinese imports to 60%, which would impact goods including battery energy storage systems. Such an increase, CEA said, would force battery procurement away from Chinese suppliers to Korean and Japanese suppliers, while also increasing prices.
(At the same time, CEA notes, if Section 301 tariffs on batteries and battery supply chain inputs rise, the nascent domestic battery supply in the U.S. is likely to ramp up.)
Also highly likely to have an impact on energy storage supply chains starting in February is stricter enforcement of the Uyghur Forced Labor Prevention Act, which former President Joe Biden signed into law in 2021. Trump’s nomination of Marco Rubio to secretary of state brings “elevated risk of more severe and far-reaching UFLPA enforcement, including against battery imports,” CEA reported, noting that battery makers could be added to the UFLPA Entity List.
CEA also estimates there’s a “moderate” chance that the tariffs Trump has proposed imposing on EV batteries and other EV imports (under Section 232) are expanded to include BESS.
Market impact
According to CEA’s analysis, the ripple effects of Trump-era trade policies are likely to be felt widely, and the market is already preparing for change. Chinese suppliers are likely to ramp up capacity expansion plans outside the country even further — especially in Southeast Asia, Africa, and the Middle East — in an attempt to avoid higher Section 301 tariffs, CEA said.
For domestic manufacturers, the outlook is somewhat mixed. Many of the country’s domestic battery manufacturing projects were launched in response to, and with the help of, Biden-era incentives like those included in the Inflation Reduction Act.
But CEA notes that there are ways for U.S. manufacturers to mitigate the potential impact. For example, though battery systems imported from China in their entirety would face tariffs, systems made in the U.S. using certain parts from China are likely to face less exposure.
For domestic battery buyers, the procurement landscape is likely to become extremely complex. According to CEA’s analysis, the combination of several Trump policy proposals could put batteries imported from China “at risk for exposure to nearly 150% tariff levies.”
