Even domestic manufacturers could feel the effects of rising costs.
Update: After this story was originally published in The Spark, our weekly climate newsletter, the White House announced a 90-day pause on most reciprocal tariffs. However, this pause does not apply to China, which will see its tariffs increase by 125%.
New tariffs on goods imported into the U.S. from nearly every country in the world take effect today.
Since Donald Trump announced his plan last week to impose sweeping tariffs, the fallout has been, in a word, chaotic. Markets experienced one of the sharpest drops in decades, and the global economic order is expected to undergo permanent changes.
While many are ignoring the impact on their savings and retirement funds, experts are scrambling to assess what these tariffs could mean for various industries. As my colleague James Temple noted in a recent analysis, concern is especially high in the climate tech sector.
The Blow to Batteries
The battery industry could be hit particularly hard. China dominates much of the global supply chain and now faces staggering tariffs—meaning even U.S. manufacturers won’t escape the repercussions.
What Are Tariffs?
In simple terms, tariffs are taxes on imports (in this case, goods entering the U.S.). For example, if a U.S. company selling bracelets imports materials like beads or thread, it would now have to pay an additional percentage to the U.S. government for those supplies. Under Trump’s plan, this surcharge could range from 10% to over 50%, depending on the exporting country.
In theory, tariffs are meant to protect domestic producers by making foreign goods more expensive. However, since many U.S. supply chains rely on global inputs, even “Made in the U.S.A.” products could still be subject to these taxes.
China’s Dominance and the Ripple Effects
For batteries, the tariffs could be especially damaging. China produces over 75% of the world’s lithium-ion battery cells, according to the International Energy Agency (2023). Trump’s new policy adds a 34% tariff on all Chinese goods, on top of the existing 20%, bringing the total to 54%. Recently, the White House hiked rates even further, reaching a staggering 104%.
But there’s more: Lithium-ion batteries already faced a base tariff of 3.5%, plus a 7.5% duty on those from China (which will rise to 25% in 2025). Combined, by 2026, these products could face an effective tariff of 82%. This will drive up costs not only for electric vehicles and grid storage but also for devices like smartphones and laptops.
Economic Consequences
The implications are enormous. The U.S. imports the majority of its lithium-ion batteries, with nearly 70% of those imports coming from China. Between January and April 2024 alone, the U.S. imported over $4 billion worth of these batteries from China.
While domestic manufacturers might seem poised to benefit, the reality is different: The U.S. has few production facilities, and most still rely on Chinese components subject to tariffs. China doesn’t just dominate cell production (75%)—it also controls key materials, supplying 80% of cathodes and over 90% of anodes (the positive and negative ends of a battery).
Uncertainty for Alternatives
Even companies exploring alternative chemistries, like Lyten—which makes lithium-sulfur batteries using U.S.-sourced materials—face risks. Its planned 2027 factory depends on affordable construction costs, now in doubt. “We’re still figuring it out,” Lyten’s Chief Sustainability Officer Keith Norman told Heatmap News.
An Industry Under Pressure
The U.S. battery sector was already struggling. During Trump’s presidency, billions in factory investments were canceled. Businesses, which typically avoid uncertainty, now face an even more volatile landscape thanks to these tariffs.
By: Nestor Castillo, ForAllTechNews Director