Trump’s Trade War with China Threatens Crucial Green Technologies

Even though the US-China tariffs have been paused until early November, businesses in both nations remain on edge. Experts caution that if President Donald Trump proceeds with reciprocal tariffs, they could substantially affect Chinese exporters and severely threaten the already fragile US climate tech sector.

Antoine Vagneur-Jones, BloombergNEF’s head of trade and supply chains, highlights that the most significant repercussions will be experienced by American battery installers and developers. Since China is a leading exporter of lithium-ion batteries and related materials to the US, rapidly changing supply chains presents a significant challenge.

Below is an overview of how tariffs could affect batteries and other renewable technologies:

Utility batteries

BNEF’s analysis shows that for every five lithium-ion batteries imported into the US during the first five months of this year, three were sourced from China. This ratio rises even higher for lithium iron phosphate batteries, which are frequently used by utilities.

Tom Moerenhout, a Columbia University professor focusing on policy, economics, and climate technologies, notes, “This will definitely impact the battery storage market” in the US. He emphasizes that since battery deployment is vital for managing renewable energy’s intermittent nature, “this will certainly slow down the energy transition.”

Presently, tariffs on utility-scale batteries from China are nearly 41%. While countries like South Korea may offer alternatives, their batteries typically come at a higher cost. Adding to this, a 15% levy on all imports from South Korea raises additional expenses for prospective importers.

Though the US has initiated efforts to establish its domestic battery supply chain, Vagneur-Jones asserts that this process will take time. Additionally, US battery manufacturers are impacted by Trump’s trade war, which could hinder their ability to increase production. Companies such as LG Energy Solution and Fluence Energy have made considerable investments to bolster manufacturing but depend on imported components, including battery cathodes and anodes, many of which are sourced from China.

Rare earth minerals

Another vital area dominated by China in the US clean tech supply chain is rare earth minerals. China not only mines more rare earth minerals than any other country but also controls approximately 90% of global refining capacity. While the Trump administration has exempted rare earth imports from tariffs, Beijing imposed export restrictions on several strategic materials in early April in retaliation for Trump’s tariffs.

This disruption in the supply chain has caused turmoil across various US industries. For example, Ford Motor Co. temporarily shut down one of its factories in May due to difficulties in obtaining rare-earth magnets, which are essential for components like seats, audio systems, and windshield wipers. Regular exports of rare earths to US firms resumed only after a new trade agreement was established on June 11. It remains uncertain whether these export restrictions will resurface if trade negotiations falter.

“Rare earths are a bargaining chip between China and the United States,” comments Grant Hauber, a supply chain expert at the Institute for Energy Economics and Financial Analysis. “Due to erratic policy decisions, nothing is off the table.”

If Beijing chooses to weaponize rare earths again, numerous US climate tech manufacturers could face significant setbacks. Neodymium magnets, which are included in China’s export limitations, are essential for electric vehicle motors and commonly found in wind turbines.

Long-term effects

This situation arises as Trump rolls back government support for various emissions-reducing technologies, especially electric vehicles and wind farms. The renewables sector has been taken aback by the gravity of these challenges, which is evidenced by an increasing number of project cancellations.

In the first half of 2025, companies canceled, paused, or scaled down US-based green projects worth over $22 billion, according to research group E2. This occurred prior to Trump enacting a tax law that removed clean tech incentives and before the latest tariffs were introduced.

On Tuesday, Trump extended the trade truce with China for another 90 days, according to sources close to the matter. This agreement, which seeks to reduce retaliatory tariff hikes and alleviate export restrictions on rare earth magnets and specific technologies, was on the verge of expiration.

Nonetheless, experts warn that ongoing trade negotiations could hinder the US’s ability to advance climate technology.

“The golden rule in business is stability,” asserts Hauber. “When there’s a build-up of volatility and constant changes in decisions and guidance, most stakeholders are likely to adopt a wait-and-see approach.”

© 2025 Bloomberg

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