US-China Tariffs Threaten Green Technologies Amid Trade War

The US-China trade war threatens the US clean tech industry, particularly battery installers and developers, as China dominates the export of lithium-ion batteries and battery materials to the US. Tariffs on utility-scale batteries made in China already stand at nearly 41%, and countries like South Korea can offer an alternative but at a higher price. The US has started to develop its domestic battery supply chain, but it will take time to build it out. China also has a stranglehold on the US clean tech supply chain for rare earth minerals, which are critical for various industries, including automakers.

The US-China trade war, with its reciprocal tariffs and shifting policies, is poised to significantly impact the US clean tech industry, particularly in the realm of battery technology and rare earth minerals. As the deadline for the current tariff truce approaches, businesses on both sides of the Pacific Ocean are bracing for potential disruptions.

Battery Industry Under Threat

The US clean tech sector, notably battery installers and developers, faces a substantial challenge due to China's dominance in the export of lithium-ion batteries and battery materials. According to BloombergNEF, nearly 60% of the lithium-ion batteries imported by the US in the first five months of 2025 came from China [1]. This reliance on Chinese imports is particularly concerning given the high tariffs already in place. Tariffs on utility-scale batteries made in China stand at nearly 41%, and alternatives from countries like South Korea come at a higher cost due to a 15% levy on imports [1].

While the US has begun to develop its domestic battery supply chain, the transition will take time. Companies such as LG Energy Solution and Fluence Energy have invested heavily in expanding their manufacturing capacity, but they rely on imported components, many of which are traditionally sourced from China. This dependency on Chinese imports could be severely disrupted by the tariffs, potentially slowing down the energy transition and the deployment of renewable energy sources [1].

Rare Earth Minerals and Supply Chain Disruptions

China's control over the global supply of rare earth minerals, which are critical for various industries including automakers, is another significant concern. The Asian nation mines more than 90% of the world's rare earths and controls roughly 90% of the global refining capacity. In response to US tariffs, China has imposed export controls on strategic materials, causing supply chain disruptions. For instance, automaker Ford had to temporarily shut down one of its factories due to the difficulty of obtaining rare-earth magnets [1].

The potential return of export controls on rare earths if the trade negotiation falls apart could further hinder US clean tech manufacturers. Neodymium magnets, for example, are critical for electric vehicle motors and wind turbines. The uncertainty surrounding these materials makes it challenging for US companies to plan and invest in long-term projects [1].

Long-term Effects and Uncertainty

The uncertainty surrounding the US-China trade war has already led to cancellations and delays in US-based green projects. In the first half of 2025, companies cancelled, closed, or scaled back US-based green projects worth more than $22 billion [1]. The latest round of tariffs and the potential for further escalation could exacerbate these issues, slowing down the growth of the US clean tech industry.

Recent Developments

In a recent development, President Trump signed an executive order extending the trade truce with China by 90 days, preventing major increases in tariffs and easing tensions. This extension provides some relief but does not resolve the underlying issues. The ongoing negotiations between the US and China raise doubts about whether a long-term agreement can be reached before the August 12 deadline [2].

Conclusion

The US-China trade war is set to have profound implications for the US clean tech industry, particularly in the sectors of battery technology and rare earth minerals. While the current extension of the trade truce offers a temporary reprieve, the long-term effects of the trade war remain uncertain. The industry must navigate a complex landscape of tariffs, supply chain disruptions, and political volatility to maintain its growth trajectory.

References

[1] https://www.bloomberg.com/news/articles/2025-08-11/how-trump-tariffs-on-china-would-affect-the-clean-tech-sector
[2] https://www.wionews.com/world/us-china-tariff-deadline-pushed-trump-signs-last-minute-order-to-extend-trade-truce-with-beijing-by-90-days-to-avoid-escalation-1754940562402