US tariff impact on EU utilities limited, but EDPR, Orsted most exposed

The impact of the US government's sweeping tariff regime to European utilities should be limited overall, analysts said, though some major companies in the sector have significant exposure to the American market.

Analysts at Jefferies noted that European utility stocks edged higher, and the sector overall saw a 3% intraday increase on April 3, the day after President Donald Trump unveiled new tariffs on imports into the US.

This uptick reflects the sector's limited exposure to the US market, Jefferies analysts said, particularly as the most significant risks stem from the renewable energy segment, where Portugal-headquartered EDP Renovaveis is most exposed.

For renewables operations in the US, the tariffs are particularly relevant for solar panel imports from Southeast Asia. Vietnam, Thailand, Cambodi, and Malaysia account for 80% of US solar panel imports.

The newly announced tariffs on those nations range from 24% to 49%, while China faces a 54% tariff.

The tariffs are expected to raise cost pressures on firms with US renewable energy exposure, leading to lower margins in the near term despite potential offsets from rising offtake prices. Alongside EDPR, Denmark's Orsted and Germany's RWE also have significant US operations, both in onshore renewables and offshore wind.

While the US has ramped up solar module manufacturing, aided by the Inflation Reduction Act, much of the upstream supply chain for solar panels relies on imports. Jefferies said Trump's tariffs are anticipated to hinder solar and battery storage development within the US. Imports from the European Union will be subjected to a 20% tariff, which could affect wind energy developers.

Siemens Energy, which manufactures energy equipment such as gas turbines, grid infrastructure and wind turbines via subsidiary Siemens Gamesa Renewable Energy, said it would take time to assess the impact on its business and global supply chains.

"For the time being, it is unclear whether the tariffs will equally impact our competitors. Siemens Energy is already serving the US with 12,000 jobs and eight factories. Overall, regarding the US market, we remain optimistic and expect more opportunities than risks," a Siemens Energy spokesperson said in an April 3 email.

Utilities with exposure to US grids, such as Iberdrola and National Grid, have indicated that their domestic sourcing of equipment minimizes the impact of tariff changes.

EU political reactions

Political responses may also impact European players' activities in the US. On April 3, French President Emmanuel Macron urged European businesses to temporarily halt investments in the US until "clarification" on the tariffs is available.

Such a policy shift could affect spending by state-owned EDF, which is the second-largest solar developer in the US and the third-largest wind developer.

EDF and fellow French utility Engie declined to comment on the matter April 3.

The EU has lined up a series of countermeasures in response to the tariffs.

"We are already finalizing a first package of countermeasures in response to tariffs on steel," EU Commission President Ursula von der Leyen said in an April 3 statement. "And we are now preparing for further countermeasures, to protect our interests and our businesses if negotiations fail."

Tariffs are also expected to hurt Germany's car industry, which is a significant supplier of electric vehicles to the US. German car industry trade association VDA criticized the policy, pointing to rising prices and reduced consumer choice in the US.

"Tariffs of this kind also reduce the pressure for innovation on US companies, thus weakening their international competitiveness in the medium term," VDA President Hildegard Muller said.