President Trump’s tariffs will do little to ensure the development of a clean energy industry.
Donald Trump’s sweeping tariffs are meant to bring manufacturing back to America. In clean energy, though, they risk stifling growth at home while doing little to reduce the United States’ reliance on Chinese technologies like batteries. The result will not be the revival of industry, but higher costs, weaker demand, and likely more bankruptcies for American startups.
Nowhere is this clearer than in the battery sector, the backbone of electric vehicles and grid storage. On paper, tariffs on Chinese lithium-ion batteries and critical minerals give an advantage to producers that can manufacture in the United States with non-Chinese inputs. In practice, only a few companies can manage this.
Korea’s LG Energy Solution, the largest producer outside China, for example, recently secured a $4.3 billion deal to supply Tesla. US start-ups, by contrast, are struggling to scale up their operations.
The reason is simple: tariffs have created a protected market, but one without much growth. That is by design. Trump does not want to subsidize clean energy or electric vehicles for ideological reasons. His Department of Energy favors coal, gas, and oil over wind, solar, and batteries.
His “One Big Beautiful Bill” illustrates the contradiction: it removes consumer subsidies for electric vehicle purchases while tightening restrictions on Chinese batteries and components. The result is protection without expansion.
Graphite offers a case in point. China supplies nearly 100 percent of the world’s anode material. Trump’s ninety-three percent tariff on Chinese imports amounts to a ban, but with US battery factories already under strain, investors see little reason to build an alternative supply. The bottleneck remains — only now, it comes with higher costs.
Meanwhile, utilization rates tell the story of a battery sector that’s treading water. In the first half of 2025, LG Energy Solution’s battery plants operated at just 51.3 percent of capacity. Instead of ramping up production, the industry is struggling to keep existing factories busy.
And despite tariffs, Chinese batteries are still flowing into the US market. From January to June, the United States imported $6 billion worth of Chinese lithium-ion batteries — an 18.6 percent year-on-year increase, accounting for nearly one-fifth of China’s global exports. Tariffs have not stopped the flow; they have only nudged prices upward while leaving US producers in limbo.
U.S. automakers, for their part, are still betting on an electric future. They know there is no long-term guarantee that Washington will keep Chinese electric vehicles out of the American market. As a result, Ford and General Motors are pressing ahead with big investments in electric vehicles.
As a result, Trump’s success is limited: no real reduction in Chinese imports, no broad-based revival of US industry, and not even the fossil fuel renaissance that Trump’s allies are hoping for. What his policy has produced is a protected market in which some incumbents benefit while domestic challengers falter.
The broader lesson is clear: tariffs alone cannot build a clean energy sector in the United States. Without parallel investments to expand supply chains, sustain demand, and train a skilled workforce, the United States is risking ending up with higher costs, slower growth, and continued dependence on foreign producers.
This is not just an economic question but a strategic one. Clean energy is a central battleground in US-China competition. Batteries, solar panels, and electricity grids are the building blocks of the 21st-century economy. If the United States wants to lead, it cannot afford to leave itself behind.
Tariffs may create short-term protected winners. But they are not a strategy. Without a coherent plan to pair protection with investments, the United States will fall further behind China in the race for the industries of the future.
About the Author: Henry Sanderson
Henry Sanderson is an author and journalist focusing on clean energy. He is the author of ‘Volt Rush, the Winners and Losers in the Race to Go Green,’ which was chosen as a book of the week by the ‘Observer,’ and one of the best science and environment books of 2022 by ‘The Times.’ A former journalist for the ‘Financial Times’ and ‘Bloomberg,’ he is currently an associate fellow at the RUSI think-tank in London, and writes a weekly newsletter on Substack.
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