Battery storage suppliers caught in the middle of US-China trade dispute

US imports of various types of batteries and related parts for energy storage systems, electric vehicles, consumer electronics and other uses have soared this decade, especially lithium-ion batteries made in China.

Since 2021, the US has imported over $100 billion in electric storage batteries and components, reaching record heights in 2024, according to the S&P Global Market Intelligence Global Trade Analytics Suite.

Roughly half of that came from China, highlighting the extent to which battery and component shipments to key US industries are caught in the crossfire of escalating trade tensions between Washington and Beijing. Even as US President Donald Trump on April 9 paused previously announced tariffs on many countries, he ratcheted up rates on Chinese imports to 145%.

'Pause in the market'

The Trump administration's trade moves add to existing and previously planned levies on lithium-ion battery imports, including 25% tariffs that the Biden administration applied to Chinese EV batteries in September 2024 and 25% rates on lithium-ion batteries for non-EV uses already scheduled to start in 2026.

Rising tariffs on US battery imports "will undoubtedly put a pause in the market as developers reassess and adjust their financial models to move forward in the smartest, most strategic way," Mark Babcock, chief revenue officer at Oregon-based energy storage system integrator Powin Energy Corp., said in an April 9 email.

Battery storage systems emerged in 2024 as the second-largest type of new resource added to the US grid — after solar — and have become core assets for power system reliability as demand rises, above all in Texas and California. China-based suppliers, including battery manufacturing giant Contemporary Amperex Technology Co. Ltd., are largely behind the lithium-iron phosphate batteries that have become a popular chemistry for US energy storage systems and EVs.

Taking advantage of lucrative tax credits offered by the 2022 Inflation Reduction Act (IRA), battery makers from China, South Korea and Japan are investing billions into US factories, many in partnership with US energy storage and EV companies.

But domestic battery manufacturing is still ramping up, the future of IRA incentives is uncertain and tariff risk is growing.

"When it comes to LFP cell supply ... the reality is the US has few alternatives today," Babcock said, referring to lithium-iron-phosphate cells. "That's why clarity around tariffs and long-term incentives is essential. Without it, we risk stalling the very progress we're trying to accelerate."

Babcock's comments echoed those of other clean energy industry representatives concerned over the Trump administration's trade policy "whiplash."

Monthly US imports of electric batteries and parts hit new heights ahead of Trump's inauguration, with a total value of $3.46 billion in December 2024, according to the Global Trade Analytics Suite. The value of imports fell from that record level in following months, but imports in January and February were still roughly 10% higher than in the first two months of 2024.

Inflation fears

Trump's pivots on applying, rescinding and pausing tariffs make it difficult to "more than speculate" on the impacts on the US energy storage and broader power sectors, according to Scott Murtishaw, executive director of the California Energy Storage Alliance (CESA).

But a spike in tariffs on China "would obviously significantly raise the cost of energy storage project development in California and anywhere in the United States, which would be a huge impact on ratepayers," Murtishaw said in an interview.

CESA represents many of the biggest developers and equipment suppliers active in one of the world's largest markets for lithium-ion battery stations, including AES Corp., NextEra Energy Inc. and Tesla Inc.

Murtishaw hopes the industry can avoid the kind of supply chain challenges experienced during the COVID-19 pandemic, which triggered widespread battery storage contract renegotiations in the US, with cost increases partially passed on to utility ratepayers.

"It is something that you would look to avoid, but it may be inevitable," he said. "These are not tariff levels that can just be absorbed either by the vendors or the project developers; they will need to be passed through."

Tesla CEO Elon Musk, a close adviser to Trump, has been critical of tariffs. In a letter to the Office of the US Trade Representative in March, Tesla called for a "phased approach" to US trade actions. The letter pointed to Tesla's substantial domestic US manufacturing investments, including its factory in California that assembles its utility-scale Megapack systems.

"Nonetheless, even with aggressive localization of the supply chain, certain parts and components are difficult or impossible to source within the United States," Tesla said in the letter.