US imports of lithium-ion batteries for electric vehicles, energy storage systems and other high-tech products held steady in this year's first three months following a surge in 2023.

First-quarter 2024 battery shipments ticked up 1.5% from a year ago to 200,224 metric tons but were down 15% from 2023's record fourth quarter, according to the S&P Global Market Intelligence Global Trade Analytics Suite.

Chinese factories continued to dominate US lithium-ion battery imports, accounting for 84.5% of first-quarter volumes, followed by South Korea with 4.7% and Japan with 2.8%.

Imports in the first quarter of 2024 were higher than annual shipments in 2020. Rising imports of lithium-ion batteries in recent years mirror a boom in US utility-scale energy storage projects and consumer demand for electric vehicles, though US EV sales have stalled so far in 2024 at 8% to 10% of total light-duty vehicle sales, according to a recent S&P Global Market Intelligence report.

Future battery import levels appear likely to hinge on US government trade actions and the emergence of domestic factories.

The Biden administration in May proposed boosting tariffs on solar, EV and battery imports from China under Section 301 of the Trade Act of 1974, arguing that stricter measures are required to protect domestic manufacturers from "unfairly priced" shipments.

The tariff rate on lithium-ion EV batteries would increase from 7.5% to 25% on Aug. 1 and would make the same jump for non-EV lithium-ion batteries in 2026, pending the outcome of a US Trade Representative proceeding.

Reducing reliance on China 'extremely critical'

In response to the proposed tariff increases, some energy storage developers have said they plan to accelerate projects to avoid higher US import tariffs in 2026, while others are looking to domestic battery-makers seeking to expand with the aid of tax incentives in the 2022 Inflation Reduction Act.

"Moving supply chain to the US or out of China, at least, is extremely critical," Michael Arndt, president of renewable energy and battery storage developer Recurrent Energy LLC, a subsidiary of Canadian Solar Inc., said June 27 at an industry conference in Portland, Ore.

Tariffs, combined with the tax incentives, have "drastically changed the landscape" in favor of building domestic factories, Arndt added.

"There is a push from many of the suppliers we use to build up supply outside of China," Jeff Waters, CEO of Oregon-based battery storage system integrator Powin Energy Corp., said in an interview. "We're working very closely with them to make sure we get a diversified supply chain ... but that's going to be an ever-evolving issue."

Powin is in talks with US cell producers and Chinese suppliers that are exploring production outside of the country.

"We're talking with them all just because we want to keep on top of who's real, who's going to make it happen on time to help us keep our supply chain flowing," Waters said.