First, President Trump freezes federal support for many renewable energy projects, coupled with the cry of “drills, babies, drills.”
Then came the tariffs.
The president's trade war is expected to raise the costs of almost every component of US clean energy production, from wind turbines steel to electric vehicle batteries.
Many of these building blocks are imported from the European Union, China and Southeast Asia, where some of the highest tariff rates were allocated.
How that affects the energy mix in the US is complicated, experts say. After all, the rising costs of these and other materials do not affect renewable energy alone. Much of Trump's trade policies, including tariffs on steel and aluminum, will also collide with fossil fuels, making it more expensive to build natural gas export terminals and drill oil wells, despite the president's pledge to make oil and gas cheaper and more plentiful.
However, the renewable energy industry is particularly sought for a significant effect.
Vanessa Sciarra, vice president of trade and international competitiveness at the American Clean Power Association, a renewable energy trade group, said “policy whiplash” puts Americans at risk access to affordable and reliable energy by cutting supply chains.
Tariffs are widely expected to sort energy landscapes well beyond our boundaries.
While US oil and gas exports have skyrocketed over the past decade, the long-term outlook for growth overseas has already been unstable, with buyers in Europe and Asia looking to reduce their reliance on fossil fuels as part of a pledge to reduce greenhouse gas emissions moving through the planet. The possibility that China or the European Union could impose retaliatory tariffs on American fossil fuels could put further dents on their exports, analysts said.
Globally, it is already ongoing globally thanks to China's growth ability to produce large-scale, inexpensive, high-quality solar panels, wind turbines, and lithium-ion batteries, and thanks to the large-scale capacity of China. The US imports many of its solar panel components from Chinese companies operating in Southeast Asian countries. And the majority of lithium-ion batteries that the US imports for use in its power grid and electric vehicles come from China itself.
Some analysts pointed to India as a relative beneficiary of the changing landscape. India is currently increasing its own domestic solar and batteries production, suffering from lower tariff charges than China and some countries in Southeast Asia.
China could also redirect many of its exports to emerging markets like Pakistan and Brazil. In contrast to the US and Europe, China's share of exports of wind turbines, solar panels and electric vehicles to low- or middle-income countries has grown sharply over the past three years.
In 2022, for example, according to Bloombergnef, China sent around 65% of its wind turbine exports to high-income countries. However, by 2024, it had sent over 60% to low- and middle-income countries. Beijing plans to build a factory to assemble Nigerian solar panels and Indonesian electric vehicles.
“Unless they want to burn money, we don't know why Chinese clean technology companies will invest more in the US market,” said Li Shuo, director of the Chinese Climate Hub at the Asian Association's Institute of Policy Research. “Will this moment mark the effective conclusion of the Biden Energy Transition Strategy, an attempt to create a domestic green energy industry that could compete with China?”
In recent years, many solar, wind and battery manufacturers have been looking to open new plants in the United States, spurring generous tax credits and incentives from the 2022 Inflation Reduction Act. The US currently has the ability to create 50 gigawatt solar modules, sufficient to meet US demand, but still imports many of the underlying components, such as cells and wafers.
This year, wind, solar and batteries are projected to account for 93% of the new power capacity added to the American grid. In many places, building new wind turbines and installing solar panels are often the cheapest ways to generate additional electrons.
In theory, tariffs could promote more domestic clean energy production in the United States. However, further uncertainty about whether Congressional Republicans could eliminate some or all of the Inflation Reduction Act and ease incentives for electric vehicles and domestic manufacturing, companies have already suspended new investments or cancelled planned plants.
Tariffs are so widespread that moving renewable energy production to the US seems unlikely, even in the long term, said the vice president of sustainability investment at a financial services company, particularly the Trump administration, which is frozen in the freeze on federal investment in renewable energy. Manufacturers need to make risky investments in relocating the entire supply chain, including steel manufacturing, mineral processing, and assembly lines, to make them cost-effective.
