New U.S. tariffs jeopardize battery supply chains and clean tech

Clean Tech Faces Turbulence as Tariffs Hit Global Supply Chains

As sweeping new U.S. tariffs go into effect this week, experts warn that one of the hardest-hit sectors could be batteries—a cornerstone of clean energy technologies from electric vehicles (EVs) to grid-scale storage. Even U.S.-based manufacturers may find little relief as costs climb and uncertainty deepens.

While the White House has paused most reciprocal tariffs for 90 days, this does not apply to China, which now faces a 125% tariff rate on its exports to the United States. For the battery industry, heavily reliant on Chinese production, the implications are massive.

Battery Costs Could Soar Under New Tariff Regime

Tariffs are essentially import taxes. In theory, they encourage domestic manufacturing by making foreign goods more expensive. In practice, they can have ripple effects—especially in industries with globalized supply chains.

China controls over 75% of global lithium-ion cell production, according to the International Energy Agency. It also dominates the supply of key materials, producing 80% of cathode materials and more than 90% of anode materials—the essential “positive” and “negative” sides of a battery.

Trump’s latest tariff package adds a 34% duty on Chinese goods, on top of an existing 20% tariff, bringing the total to 54%. Then came the retaliatory hike this week: an additional 50%, pushing the total to 104%. And that’s before factoring in other existing battery-specific tariffs, such as:

• 3.5% tariff on lithium-ion batteries

• 7.5% tariff on batteries from China, increasing to 25% in 2026

Together, this could result in a combined 132% tariff on Chinese lithium-ion batteries within two years—a seismic cost shift that would ripple through the market.

Domestic Manufacturers Also Feel the Heat

You might think this benefits U.S. battery companies—but most still source critical components from China. That includes materials for both mainstream lithium-ion and alternative chemistries.

Lyten, a California-based startup developing lithium-sulfur batteries, relies largely on U.S. materials. Yet even they are worried.

“We’re not drawing any conclusions quite yet,” said Keith Norman, Lyten’s chief sustainability officer, referencing planned construction for a 2027 facility and concerns about tariff-inflated building material costs.

A Fragile U.S. Battery Sector Faces New Uncertainty

While the U.S. has made some progress on battery independence, it still imports the majority of its lithium-ion batteries—and nearly 70% of those come from China. In the first four months of 2024 alone, the U.S. imported $4 billion worth of lithium-ion batteries from China.

Major manufacturers were already navigating uncertainty under the Trump administration. Multiple large-scale factory projects have been delayed or canceled in recent months. The hundreds of millions or billions required for battery infrastructure demand stable long-term policy—something tariffs upend.

Sector-Wide Impacts: EVs, Grid Storage, and Consumer Tech

Tariff-driven price hikes won’t just affect EVs. Grid storage systems, smartphones, laptops, and any other devices with rechargeable batteries are likely to see costs rise.

Worse still, the tariff burden will compound over time, as overlapping layers of policy ratchet up costs on not just finished batteries but on raw materials and subcomponents—much of which China still supplies.

As clean energy goals face mounting political and economic headwinds, the new tariff regime adds another layer of complexity to an already fragile transition. Battery manufacturers, investors, and policymakers now face a difficult question: How can the U.S. meet climate and electrification targets without a stable or affordable supply chain?

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