Tariffs are bad news for batteries

Since Donald Trump announced his plans for sweeping tariffs last week, the vibes have been, in a word, chaotic. Markets have seen one of the quickest drops in the last century, and it’s widely anticipated that the global economic order may be forever changed.  

While many try not to look at the effects on their savings and retirement accounts, experts are scrambling to understand what these tariffs might mean for various industries. As my colleague James Temple wrote in a new story last week, anxieties are especially high in climate technology.

These tariffs could be particularly rough on the battery industry. China dominates the entire supply chain and is subject to monster tariff rates, and even US battery makers won’t escape the effects.   

First, in case you need it, a super-quick refresher: Tariffs are taxes charged on goods that are imported (in this case, into the US). If I’m a US company selling bracelets, and I typically buy my beads and string from another country, I’ll now be paying the US government an additional percentage of what those goods cost to import. Under Trump’s plan, that might be 10%, 20%, or upwards of 50%, depending on the country sending them to me. 

In theory, tariffs should help domestic producers, since products from competitors outside the country become more expensive. But since so many of the products we use have supply chains that stretch all over the world, even products made in the USA often have some components that would be tariffed.

In the case of batteries, we could be talking about really high tariff rates, because most batteries and their components currently come from China. As of 2023, the country made more than 75% of the world’s lithium-ion battery cells, according to data from the International Energy Agency.

Trump’s new plan adds a 34% tariff on all Chinese goods, and that stacks on top of a 20% tariff that was already in place, making the total 54%. (Then, as of Wednesday, the White House further raised the tariff on China, making the total 104%.)

But when it comes to batteries, that’s not even the whole story. There was already a 3.5% tariff on all lithium-ion batteries, for example, as well as a 7.5% tariff on batteries from China that’s set to increase to 25% next year.