Join us for Part 2 of our Tariff Series, as we take a closer look at the U.S.–China tariff environment & how it has evolved from January to the present day.
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
The U.S. battery industry continues to adapt to a fast-changing global landscape, with trade policies, especially those involving China, playing a central role. As the world’s dominant player in battery supply chains, China remains at the heart of ongoing debates over tariffs, national security, and industrial policy. U.S. trade actions, including the imposition, extension, and/or suspension of tariffs, have created an atmosphere of uncertainty that complicates planning and investment across the sector: a sector heavily dependent on Chinese content.
Last week, we explored the global battery value chain with a broad lens. This week, we narrow our focus to the U.S.–China dynamic. We will take a closer look at the U.S.–China tariff environment and how it has evolved from January to the present day. We’ll examine recent policy shifts, market reactions, and what they suggest about the future of America’s ambitions for a more self-reliant and resilient battery manufacturing ecosystem.
Country-Specific Tariff Shifts
While our focus on global trade and the battery industry often lands on China, it’s important to remember that tariffs can impact trade with various key battery-producing nations and regions. At the beginning of 2025, important countries and territories to consider for battery tariffs included Japan (Panasonic), Korea (Samsung/LG), the EU, Turkey (Pomega), South Africa (Polarium), India, Malaysia (EVE), Thailand (Gotion), and Indonesia (CATL). For a rundown of the global playing field with respect to current tariffs, see last week’s article.
As of August 2025, the trade landscape has seen notable developments. For instance, a new EU-US trade deal, finalized on July 27, 2025, sets a 15% baseline tariff on most goods, including electric vehicles (EVs) and battery components, markedly impacting manufacturers on both continents. While this is a reduction from a threatened 27.5% rate, it still represents a significant impact for battery manufacturers.
China Tariffs – A Deep Dive into Lithium-ion, Sodium-ion, and Graphite
Lithium-ion Cells from China: At the beginning of 2025, lithium-ion cells from China, specifically for energy storage systems (ESS), faced a 64.9% cumulative tariff rate. This was not a single fee but a combination of several overlapping tariffs:
- Reciprocal Tariff: A newly imposed 34% tariff on all goods from China, citing the country’s trade surplus with the U.S
- Previously Imposed Tariff: A separate 20% tariff that had been in place from February to March 2025 on certain goods from China.
- Section 301 Tariff: A specific 7.5% tariff targeting China’s new energy industry for non-EV batteries, which was scheduled to increase to 25% by 2026.
- Baseline Tariff: The regular, standard 3.4% tariff rate on imported batteries regardless of their origin. It’s important to note that tariffs on EV batteries were even higher during this period.
By August 2025, the landscape had evolved further, particularly for electric vehicle (EV) batteries. For EV lithium-ion batteries, the combined tariff rate has increased from 7.5% to 58% in 2025. Some analyses suggest that the total tariffs could be as high as 173% for EV batteries and 156% for non-EV batteries. While a temporary “tariff truce” may be in effect today, these underlying higher rates remain a significant factor for the industry.
While tariffs aim to protect domestic production & address trade imbalances, they have also led to increased costs for imported materials, significant market uncertainty, & financial distress for some US companies reliant on specific foreign supply chains.
Sodium-ion Cells from China: Sodium-ion cells from China presented a notable cost advantage at the beginning of 2025, with a cumulative tariff rate of 38.4%. This lower rate was primarily due to two components:
- Reciprocal Tariff: A new, broad 34% tariff applied to a wide range of goods imported from China, including batteries.
- Baseline Tariff: The standard 4.4% pre-existing tariff on imported batteries under the U.S. Harmonized Tariff Schedule, which is a lower rate than the 3.4% applied to lithium-ion batteries due to different material composition and classification. Crucially, as of early 2025, sodium-ion batteries were not yet subject to the same high Section 301 or other punitive tariffs that have been applied to lithium-ion batteries and their key component materials. This makes the 38.4% rate a significant competitive advantage for this technology.
The Critical Case of Graphite: A significant development between January 2025 and today is the impact on graphite. On July 18, 2025, the Trump administration imposed an additional 93.5% tariff on Chinese graphite imports, accusing China of “dumping” the raw material in the United States below the market price. This builds upon a 25% tariff imposed by the Biden administration last year, again, meaning Chinese graphite could now face tariffs upward of approximately 160% when combined with other duties the Trump administration has imposed on China.
Graphite is a crucial raw material for EV batteries, accounting for approximately 10% of the cell cost in Lithium-Ion batteries. This substantial tariff is expected to significantly raise the cost of building EVs at American plants, negatively impacting the automotive industry. While domestic graphite producers believe it will help increase investment and production in the domestic industry, the US industry does not currently produce enough high-purity graphite needed for EV batteries (99.9% carbon purity). Attorneys for automakers, including Tesla, have argued that US producers are not able to produce graphite to these exacting specifications, making immediate supply switching difficult. It will take time for the domestic market to catch up, meaning domestic battery makers will likely just have to pay higher prices for Chinese graphite in the interim. Furthermore, the Section 301 tariff on natural graphite is specifically scheduled to increase to 25% by January 1, 2026.
Cost Comparison – January to Present
To understand the direct financial impact, let’s look at how the final cost per kilowatt-hour ($/kWh) for different cell types has evolved, assuming a uniform starting price of $50/kWh before tariffs:
This table shows a $7.00 increase in the cost of Lithium-ion from China between the beginning of 2025 and August 2025. Now, compare these costs to Lithium-ion from China as a baseline:
The percentage differences illustrate that Lithium-ion from India and Sodium-ion from China have become relatively more cost-competitive against Lithium-ion from China in August 2025, compared to January 2025. This highlights the increasing pressure on Chinese lithium-ion battery costs due to tariffs and the need for domestic battery manufacturers to seek flexible alternatives (in terms of both region and chemistry).
The Strategic Impact on Investments and Supply Chains
The evolving tariff landscape underscores the critical importance of a flexible strategic supply chain, a fact that was also highlighted during the global COVID-19 pandemic. Geopolitical policies and the challenges therein, driven by economic factors or the need for secure supplies, are forcing companies to rethink their reliance on single vendors or countries.
The impact on new battery investments in the US has been significant and, at times, detrimental. Some reports and analysts indicate that Trump’s tariffs are hurting battery industry investments in the United States, potentially leading to more expensive electricity and a compromised energy transition, as domestic production struggles to keep pace with domestic energy needs. Companies like the Finnish Group Wartsila, a major battery supplier, have seen their US order intake drop by a staggering 79% due to the uncertainty around tariffs, leading them to focus on more active markets like Australia, the UK, and Europe. US-based Fluence also warned of a billion-dollar shortfall in orders, with potential earnings dropping to zero, directly citing the Trump administration’s tariff threats. Perhaps most starkly, the Oregon-based company Powin, once a top-three ESS integrator, filed for Chapter 11 bankruptcy in July 2025, with tariff-driven costs on Chinese battery imports being a main factor in its inability to find alternative suppliers. Chinese-made ESS batteries imported into the US are currently subject to a 40.9% tariff, which is anticipated to rise to 58.4% next year.
This tumultuous environment is leading to a recalibration not only of the EV battery sector but of the battery industry overall. While the U.S. had previously surpassed China in battery manufacturing investments in the last year, largely due to tax credits from Biden’s 2022 Inflation Reduction Act (IRA), this momentum is now waning. In the first quarter of 2025, overall investments in US battery manufacturing dipped, and US companies canceled over $6 billion in battery projects, the most since 2018. This is attributed to the uncertainty surrounding potential rollbacks of IRA provisions by the Trump administration.
However, this situation is also opening doors for other players. Korean battery-makers like LG Energy Solution, Samsung SDI, and SK On are moving to fill the gaps in the US ESS market. LG Energy Solution, uniquely positioned as the only company capable of manufacturing LFP ESS cells in the US at its Michigan facility, has secured large deals, while Samsung SDI and SK On are also gearing up for LFP cell production in the US by converting existing lines or signing supply deals. This highlights a strategic adaptation: localization of production to mitigate tariff impacts and supply chain diversification to reduce dependence on restricted materials and regions. There’s also an increased incentive for technology innovation into alternative battery chemistries like sodium-ion that rely less on currently restricted materials. The domestic battery market is adapting, and despite some short-term pain points, we have a chance to create a more robust, resilient, sustainable supply chain that supports long-term energy independence and positions us as a global leader in clean energy technologies.
Conclusion
The period from January to the present day has been a whirlwind for the US battery industry. While tariffs aim to protect domestic production and address trade imbalances, they have also led to increased costs for imported materials, significant market uncertainty, and financial distress for some US companies reliant on specific foreign supply chains. The dramatic rise in tariffs on Chinese graphite, coupled with broader trade tensions, is pushing manufacturers to localize production, diversify their supply chains, and accelerate the adoption of alternative battery technologies. The ongoing evolution of these policies will continue to shape the future competitiveness and resilience of the US battery sector. And if the rest of 2025 mirrors the first half of the year, we should all buckle up for a bumpy ride.