• Trump’s new tariffs, especially on Chinese lithium-ion batteries, threaten the planned 18.2 GW battery storage deployment in 2025.
• The tariffs, which reach up to 82% on Chinese grid batteries by 2026, could force US energy companies to reconsider spending decisions.
• While tariffs aim to boost US manufacturing, they also raise construction costs for battery producers like Lyten, potentially delaying domestic expansion.

The United States utility-scale battery storage sector has been projected to grow dramatically in 2025, as renewable energy companies look for ways to make their clean energy operations more stable and reliable. However, the recent introduction of tariffs on countries worldwide by the Trump administration, with particularly high tariffs on China, is expected to have a knock-on effect on the energy sector. It could delay the deployment of batteries as companies reconsider spending decisions in the face of higher prices.

The U.S. Energy Information Organization (EIA) said in February that it expects the U.S. to add 63 gigawatts (GW) of new utility-scale electric-generating capacity to be added to the grid in 2025. This is 30 percent higherthan the 48.6 GW of capacity added in 2024, which was the best year for capacity installation since 2002. Solar and battery storage are expected to account for 81 percent of this year’s capacity increase. However, the Trump administration’s introduction of sweeping tariffs on the import of foreign goods on 3rd April could halt clean energy progress amid economic uncertainty.

Certain U.S. states, such as Texas and Arizona, have been rapidly developing their battery-storage sectors, by installing multiple lithium-ion cells the size of shipping containers, to support renewable energy projects and reduce the reliance on fossil fuels for power during high-demand hours. However, most U.S. states are only just beginning to develop their battery storage capacity, with plans to import huge volumes of batteries to improve the grid over the coming years.

Around 69 percent of U.S. lithium-ion battery imports came from China in 2024, where Trump has imposed some of the highest tariffs. When combined with previous trade decisions, the Trump administration is imposing a 64.5 percent tax on grid batteries from China, a figure that is set to increase to 82 percent in 2026. The vice president of policy and strategy at the battery developer GridStor, Jason Burwen, said “This will throttle U.S. energy storage deployment.”

The recent tariff rollout has brought the average U.S. tariff up to 23 percent, the highest rate since the 1930s. Trump also introduced high tariffs on several Southeast Asian countries, including Vietnam at 46 percent, Thailand at 36 percent, Taiwan at 32 percent, Cambodia at 49 percent, Malaysia at 24 percent, and Indonesia at 32 percent.

Energy companies across the U.S. were expected to install 18.2 GW of grid battery capacity in 2025. This move was supposed to help make clean energy operations, such as wind and solar power, more reliable, helping to balance out the production and delivery of clean energy 24 hours a day. It would also help reduce reliance on natural gas for power during peak demand and non-production hours, as well as help to ensure the uninterrupted delivery of power if power plant equipment were to fail.

The price of lithium-ion technology has fallen sharply in recent years, making utility-scale battery installation more financially viable. However, the recent introduction of tariffs could make them more expensive and deter companies from investing in storage solutions. The head of trade and supply chains at BloombergNEF, Antoine Vagneur-Jones, explained, “Batteries are the only major cleantech sector where imports still overwhelmingly come from China… So, the impacts of these tariffs are going to be a lot bigger for batteries than they are for other technologies.”

The tariffs are expected to help revive the U.S. manufacturing sector, making it more competitive to produce goods domestically. However, several U.S. battery producers have voiced concern over the tariffs. The San Francisco-based lithium-sulphur battery producer Lyten sources over 80 percent of its core components domestically, meaning that it does not have to be worried about the rising cost of imported components. The company has plans to commence production at the old Northvolt facility this year, with plans for a larger gigafactory in Reno, Nevada in 2027. However, scaling operations will depend heavily on the cost of construction materials, which will be affected by Trump’s tariffs.

Lyten’s Chief Sustainability Officer Keith Norman explained, Lyten is “a hard tech company that needs to build a lot of infrastructure… The building of physical factories, those materials, the infrastructure to do that, the equipment to do that, a lot of that is coming through international trade.” Norman added, “The reality is the energy transition is a manufacturing transition… There’s nothing in the energy transition that doesn’t require pretty significant investments in manufacturing and build out.” This means that the Trump administration’s tariffs will likely make the expansion of U.S. manufacturing operations more expensive and complicated.

While the high costs of imports could encourage U.S. companies to expand their lithium-ion battery production capacity, the high costs associated with construction and other sectors could also deter companies from increasing their manufacturing capacity. Meanwhile, many energy companies are likely to pause imports of battery storage units as they assess the spending increase required to achieve their grid plans.

https://oilprice.com/Energy/Energy-General/Trump-Tariffs-Could-Hit-the-Battery-Storage-Sector-Hard.amp.html