Dive Brief:
- Batteries imported from China may soon be hit with tariffs nearing 150%. This could happen if all current trade measures proposed by the U.S. Congress and executive branch are approved, according to a report from Clean Energy Associates.
- In response, prices for 5-MWh lithium-ion battery systems produced in China could rise by 8% from 2023 to 2028, despite a significant drop in lithium carbonate prices predicted over the same timeframe. The report explored pricing trends for various lithium-ion chemistries, such as LFP and nickel-manganese-cobalt (NMC).
- Alternative lithium-iron-phosphate battery supplies that are preferred in energy storage are expected to gradually come online between 2025 and 2027, as manufacturers in the U.S., Southeast Asia, and Korea ramp up production. However, these batteries may remain pricier than their Chinese counterparts, except possibly for those produced in Southeast Asia.
Dive Insight:
The U.S. government is currently considering several trade actions targeting Chinese manufacturers of battery energy storage systems.
Last September, the Biden administration laid out a plan to increase the import duty on Chinese-made lithium-ion batteries from 7.5% to 25%, effective January 1, 2026. The incoming Trump administration has also suggested raising tariffs even further, potentially up to 60%.
Additionally, Trump has proposed enforcing Section 232 tariffs on various imported industrial products, which would impose a further 25% levy on imported batteries from China.
In November, Michigan Representative John Moolenaar proposed a bill to revoke China’s permanent normal trade relations status, which could lead to a universal minimum tariff of 35% on Chinese imports, including energy storage systems. Three Republican senators have backed similar legislation.
Furthermore, on January 8, the U.S. Department of Commerce began investigations into potential anti-dumping and countervailing duties on Chinese anode active materials, stemming from a complaint by a group of U.S. producers.
There are numerous possible outcomes from these trade actions, and it’s unlikely that all proposed tariffs will be implemented at once. For instance, the Trump administration might keep the Section 301 tariff at the level set by Biden, while the push to revoke China’s trade status could face hurdles in the Senate.
Even so, with limited immediate alternatives to Chinese suppliers, these trade actions are likely to push up the prices that U.S. buyers must pay for imported lithium-ion batteries, despite recent drops in lithium carbonate prices.
Currently, with scarce supply outside of China, the prices for imported batteries may influence the overall costs in the market for at least the next couple of years.
Expectations suggest minimal changes to the pricing of non-lithium raw materials like steel, copper, and synthetic graphite in the near future. However, as battery and energy management software costs rise, this could mitigate any downward price effects from declining labor costs in China.