Amid escalating tensions over trade policies, the Trump administration has implemented a 93.5% tariff on Chinese graphite, a critical material for battery production. This decision has reverberated throughout the battery supply chain, heightening costs for U.S. manufacturers. Notably, China controls 96% of the global supply of processed anode-grade graphite, essential for lithium-ion batteries, which intensifies the impact of these tariffs.
Earlier this year, Republicans in Congress approved a budget bill aligned with Trump’s priorities, effectively rolling back the clean energy initiatives of the Inflation Reduction Act (IRA). While this legislation has drawn criticism for its effects on wind and solar industries, it also poses significant challenges to the burgeoning battery sector. Under Biden, significant strides were made to establish a domestic battery supply chain, yet recent policy shifts threaten these advancements by increasing input costs and reducing demand.
Trump’s “America First” strategy appears contradictory, as it seeks to streamline mineral production yet imposes tariffs that hinder industries reliant on these resources. Such policies have led to concerns about the sustainability of American manufacturing jobs.
The Biden administration had fostered a resurgence in U.S. manufacturing through the IRA, Bipartisan Infrastructure Law, and the CHIPS Act, which catalyzed private investment into clean energy. Biden’s industrial policy for batteries included tax credits and penalties for reliance on imported components, aiming to bolster domestic production. As a result, investments in clean manufacturing tripled, with the battery sector leading the charge.
However, with the enactment of Trump’s One Big Beautiful Bill Act, tax credits that supported American manufacturing are being dismantled, while tariffs continue to be enforced broadly. This has resulted in the cancellation or delay of over $27 billion in clean energy investments and the loss of nearly 19,000 jobs. The repeal of the EV tax credit and emissions regulations further compounds these challenges, potentially jeopardizing the establishment of new battery facilities and diminishing EV sales.
The Biden-era policies had significantly boosted employment in battery production, creating over 133,000 jobs in two years. Yet, within months of Trump’s presidency, more than 6,000 of these jobs have been eliminated. Energy Innovation predicts that by 2030, 31,000 more jobs in the battery sector will be lost.
Despite the promise of energy independence, Trump’s policies have inadvertently increased energy costs. Since January, battery storage costs have surged by up to 69%, and grid deployment is expected to decline. The administration’s approach, described by University of Michigan economist Justin Wolfers, involves “raising the price of inputs like steel, aluminum & copper; creating shortages of rare earths; inviting retaliatory tariffs; cutting R&D; raising borrowing costs by blowing out the budget; and covering it all in a thick cloud of uncertainty.”
The administration’s focus on domestic mineral production, while undermining the manufacturing industries that utilize these resources, further exacerbates the issue. The U.S. has become reliant on imports for materials like copper, with no viable path to self-sufficiency in the near term, complicating efforts to expand domestic production.
The Trump administration’s policies not only threaten the battery industry but also risk ceding the lead in clean technology to China. As these policies unfold, the U.S. faces the prospect of becoming a raw materials exporter, foregoing the development of high-value manufacturing industries.
Related
Original Story at washingtonmonthly.com