Trump’s Trade War with China Threatens Crucial Green Technologies

Although the temporary pause on US-China tariffs has been extended until early November, businesses on both sides of the Pacific are still feeling uneasy. Experts caution that if President Donald Trump’s reciprocal tariffs are imposed, they would profoundly affect Chinese exporters and further threaten the already struggling US climate tech sector.

Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF, notes that the most significant losses will impact America’s battery installers and developers. As China dominates the export of lithium-ion batteries and related materials to the US, quickly altering supply chains presents a significant challenge.

The following outlines the implications of tariffs on batteries and other renewable technologies:

Utility Batteries

BNEF’s analysis reveals that in the first five months of this year, three out of every five lithium-ion batteries imported into the US came from China. This percentage increases for lithium iron phosphate batteries, typically utilized by utilities.

Tom Moerenhout, a Columbia University professor specializing in policy, economics, and climate technologies, warns that “This will definitely affect the battery storage market” in the US. He highlights that battery deployment is critical for managing the intermittent nature of renewable energy, stating, “this will inevitably slow down the energy transition.”

Current tariffs on utility-scale batteries from China stand at nearly 41%. Although alternatives may be available from countries like South Korea, their batteries are typically more expensive. To compound the issue, a 15% levy on all imports from South Korea also raises costs for prospective importers.

While the US is working to develop its domestic battery supply chain, Vagneur-Jones emphasizes that this process will take time. US battery manufacturers will also feel the effects of Trump’s trade war, which may obstruct their ability to scale up production. Companies like LG Energy Solution and Fluence Energy have invested heavily to enhance manufacturing but still depend on imported components, such as battery cathodes and anodes, many of which come from China.

Rare Earth Minerals

China also plays a pivotal role in the US clean tech supply chain concerning rare earth minerals. The nation mines more rare earth minerals than any other country and controls roughly 90% of global refining capacity. While the Trump administration has exempted rare earth imports from tariffs, Beijing retaliated by imposing export controls on several strategic materials and related products in early April.

This disruption has wreaked havoc across various US industries. For example, Ford Motor Co. temporarily closed one of its factories in May due to difficulties in securing rare-earth magnets vital for components such as seats, audio systems, and windshield wipers. Regular exports of rare earths to US companies resumed only after a new trade agreement was struck on June 11. The future of these export restrictions remains uncertain if trade negotiations falter.

“Rare earths are a bargaining chip between China and the United States,” says Grant Hauber, a supply chain expert with the Institute for Energy Economics and Financial Analysis. “Owing to unpredictable policy decisions, nothing can be ruled out.”

If China decides to weaponize rare earths again, many US climate tech manufacturers could face significant setbacks. Neodymium magnets, included among China’s export restrictions, are essential for electric vehicle motors and are widely used in wind turbines.

Long-term Effects

This scenario unfolds amid Trump’s ongoing efforts to dismantle government support for various emissions-reducing technologies, particularly those focused on electric vehicles and wind farms. The renewables sector has been taken aback by the severity of these challenges, evident in a rising number of project cancellations.

In the first half of 2025, companies canceled, halted, or scaled back US-based green projects amounting to over $22 billion, according to research group E2. This occurred before Trump enacted a tax law eliminating clean tech incentives and prior to the latest tariffs being applied.

On Tuesday, Trump announced the extension of the trade truce with China for another 90 days, according to a source familiar with the matter. This agreement, which aimed to reduce retaliatory tariff hikes and soften export restrictions on rare earth magnets and certain technologies, was due to expire at midnight in New York.

However, experts worry that prolonged trade negotiations could hinder the US’s advancements in climate technology.

“The golden rule in business is stability,” states Hauber. “When there’s accumulated volatility and changes in decisions and guidance, most stakeholders will likely choose to wait.”

© 2025 Bloomberg

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