What Trump’s tariffs mean for US battery storage industry

In one of the biggest shake ups in global trade in history, President Donald Trump has declared sweeping levies on US trading partners around the world. The new US import tariffs, including a 10% baseline on all goods and higher rates for key trading partners, such as China, Malaysia, and Vietnam, is expected to have a significant impact on the US battery energy storage industry.

In addition to the universal 10%, which is set to be implemented on April 5, the Trump Administration has named 60 countries each with a specific reciprocal tariff rate. These include 34% for China, 26% for India, 25% for South Korea, 24% for Japan, 20% for the European Union, and 10% for the UK. The reciprocal tariffs will come into force on April 9. 

Batteries are currently the only major clean tech sector where imports are predominantly sourced from China. As a result, the effects of tariffs on batteries are expected to be much more significant compared to other technologies.

According to London-based Rho Motion, more than 90% of all lithium ion battery cells deployed in the US storage market in 2024 came from China. With the reciprocal tariffs in place, Chinese goods will face a 34% rate in addition to the previously announced 20% tariffs, the 7.5% already applied to Chinese lithium iron phosphate (LFP) cells for energy storage applications and the 3.4% baseline tariffs.

As a result, Chinese LFP cells will now be subject to a 64.9% tariff, which will increase to 82.4% in 2026 under previously planned Section 301 tariff increases announced under the Biden Administration, Rho Motion finds. 

With prices in China on a downward trajectory, Rho Motion calculates that the LFP cell price could average around $100/kWh at the current level of 65% tariff. “This will then see battery prices increase further under step up of the 7.5% element of the tariff to 25% in 2026,” Iola Hughes, head of research at Rho Motion tells ESS News.

It is important to mention that ESS News spoke with Hughes on April 4 and a lot has happened since then. Meanwhile, China hit back with a 34% tax on all US imports and Trump warned that he would retaliate with an additional 50% tariff if Beijing does not back down.

When it comes to LFP battery cell supply, however, the US has few other alternatives and home-grown battery manufacturing is slow to take off. There is a significant number of domestic facilities dedicated to supplying the storage market planned by established cell manufacturers and battery start-ups. However, some have already encountered the first obstacles, such as LG Energy Solution in Arizona.

In 2026, the LFP production will just be starting in the US backed by the IRA Production Tax Credit (PTC), which provides $35/kWh for cell manufacturing. Assuming the PTC remains in place, this has the potential to dramatically bolster the cost competitiveness of domestically produced cells. However, local manufacturers will need time to scale up production, making the importation of LFP cells from China a likely best option for the US battery sector in the interim.

“It will be more expensive for US players to build cells themselves – lack of cathode and anode supply means they will face tariffs on these components, and there is the bigger issue of a lack of US players who are manufacturing LFP cells in the first place,” Hughes says. “Ultimately what this means is that the US storage market will continue to use Chinese cells even with these higher tariffs due to a real lack of alternatives.”

According to Hughes, several Chinese players have set up or have plans to set up manufacturing in SE Asian countries such as Malaysia and Indonesia to avoid the high tariffs on China, but “they too will now face relatively significant tariffs”.