New Tariffs Threaten American Battery Production

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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• Trump-era clean energy policies and a significant tariff on Chinese graphite are impeding the growth of the United States’ domestic battery industry, despite prior gains under the Biden administration.
• The domestic battery industry had committed to investing $100 billion by 2030 to build an independent grid battery sector, a goal now jeopardized by current policy shifts.
• The impact of these policies is disproportionately affecting Republican districts within the “battery belt,” leading to project pauses, cancellations, and funding declines.

Trump-era clean energy policies are slamming the breaks on the United States’ battery war with China. While lithium-ion batteries were invented in the United States, China has been outpacing the nation in terms of both battery manufacturing and technological innovations. But while U.S. companies have been scrambling to keep up, gutted clean energy incentives and tariffs on critical materials have made a U.S. victory all but impossible. 

The domestic battery industry had been gaining considerable ground under the Biden administration thanks to major incentives including the sweeping Inflation Reduction Act. Tax credits, in particular, “helped close the price gap between U.S.-made batteries and those made in China, the world’s main supplier of lithium-ion battery modules, cells, and materials,” according to Canary Media.

Realizing that the Trump administration would bring a less encouraging policy environment for clean energy technologies, makers of lithium-ion batteries promised the federal government that they would  collectively spend a cumulative $100 billion by 2030 to build up an independent and totally domestic grid battery industry. In exchange, they asked for continued political support.

So far, that plea seems to be falling flat. Just this month, the Trump administration accused Chinese suppliers of dumping graphite into U.S. markets – meaning that they are selling graphite more cheaply abroad than in their own markets. As a result, the United States has imposed a formidable 93.5 percent tariff on Chinese graphite. This could have immediate and serious consequences for United States batterymakers, as almost all refined graphite in the world comes from China. In fact, this tariff alone could “easily add $1,000 or more to the price of a battery” according to the New York Times. 

As a result, the nation’s once-thriving “battery belt” is faltering. “Projects are being paused, cancelled, and closed at a rate 6 times more than during the same period in 2024,” reports “The Big Green Machine,” a site affiliated with Wellesley College that tracks domestic clean energy investments. And this biggest projects are the ones suffering most.

Politico reports that “prospects dimmed for 34 projects that are worth more than $31 billion and were expected to create almost 28,000 jobs.” This includes projects that are either paused, canceled, delayed by at least six faced by a slash in funding, or scaled down. But the overall impact of recent political shifts are still unclear, and overall the domestic clean energy sector is still growing.

“The policies Republicans have passed are so recent that they may not have worked their way through the economy,” reports Politico. “In the last three months, Congress has passed and President Donald Trump has signed bills that removed key tax credits, taken the teeth out of fuel-economy rules and neutered California’s ability to force automakers to sell EVs.” 

Taken together, all of these compounding policy measures create an uncertain policy and investment environment at minimum. More likely, it will cause an extreme contraction of the domestic battery sector at a time when Beijing was already pulling away.

“Unquestionably, the Chinese are ahead in manufacturing technology,” Bob Galyen, a retired executive who worked with both GM and the Chinese battery giant CATL, told NPR. He says that Chinese battery research and development is receiving major influxes of cash at a time when U.S. manufacturers are struggling for funding. “Clearly, the U.S. is lagging behind,” he finished.

Ironically, these measures are hitting Republican districts the hardest. The so-called “battery belt” is mostly comprised of red states. As a result, according to Politico, “GOP districts saw 60 percent of the funding decline, while Democratic districts saw 39 percent.”

By Haley Zaremba for Oilprice.com

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