With the effects of recent tariffs on battery manufacturing facility initiatives, what are some key strategies the U.S. can employ to build a resilient domestic battery industry that prioritizes manufacturing? Join us for the final part of our Tariff Series, as we dive into a few key strategies!
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
While the battery industry on the world stage continues to evolve to adapt to the new reality of geopolitics, on the home front, large-scale domestic battery projects totaling $9.5 billion were canceled between 2024 and 2025 due to increased costs, while new project announcements amounted to only $1.175 billion. This highlights the ongoing tension between protectionist measures and the immediate economic challenges of building robust domestic supply chains for the entire battery sector. And a robust, stable supply chain is essential in promoting domestic battery manufacturing. Despite the fact that the current administration has expressed a desire to prioritize domestic manufacturing through the current tariff measures, the tariff regime has provided more “stick” than “carrot” to companies that are committed to on-shoring battery manufacturing in the U.S. The U.S. has some ground to cover in the short term.
For contrast, here’s a look at how different regions are incentivizing the battery and minerals industries:
By embracing a more proactive strategy on the policy front, the U.S. can create a thriving domestic battery industry that will not only power our clean energy future but also create
high-paying manufacturing jobs & ensure our national & economic security for decades to come.
The Biden administration’s Inflation Reduction Act (IRA) was a piece of legislation that impacted the domestic battery industry. It offered a suite of tax credits and incentives for everything from mineral processing to battery cell and pack manufacturing, and even for the purchase of electric vehicles. The IRA was met with a surge in announcements for new gigafactories and a renewed sense of optimism for a resilient American battery supply chain.
However, the subsequent Trump administration has taken a different tack, rolling back many of these incentives and creating a climate of uncertainty that threatens the progress the energy storage industry made under the previous administration. The current administration has signaled a move away from the IRA’s clean energy tax credits, and critically, it has imposed tariffs on key battery materials, such as Chinese graphite, for example. While ostensibly aimed at protecting domestic industries, these policies have been criticized for disrupting supply chains and increasing costs for U.S. manufacturers. As a result, a number of clean energy projects, including battery manufacturing facilities, have been paused, canceled, or scaled back.
So, what can the U.S. do to regain its momentum and build a truly resilient and secure domestic battery industry that prioritizes manufacturing? The answer lies in a strategic blend of “carrot” and “stick,” with a much heavier emphasis on the former.
Here are a few key strategies the U.S. could employ:
- Double Down on Manufacturing Incentives: Instead of rolling them back, the U.S. should expand and extend the manufacturing tax credits and grants offered under the IRA. This would provide the long-term certainty that businesses need to make significant capital investments in domestic production facilities.
- Invest in Research and Development: To leapfrog the competition, the U.S. must invest heavily in next-generation battery technologies. This means increased funding for national labs and universities, as well as public-private partnerships to accelerate the commercialization of new innovations.
- Streamline Permitting and Regulations: While environmental protection is paramount, the U.S. needs to streamline the permitting process for new mines, processing facilities, and manufacturing plants. A clear and predictable regulatory environment will attract investment and get projects off the ground faster.
- Foster a “Team USA” Approach: The U.S. should foster a collaborative ecosystem that brings together all stakeholders, from mining companies and materials processors to battery manufacturers and automakers: the full range of energy storage stakeholders. This could involve the creation of a national battery consortium or other public-private partnerships to coordinate efforts and share best practices.
- Use Tariffs Strategically, Not Punatively: While tariffs can be a useful tool to level the playing field, they should be used judiciously and in conjunction with a broader industrial strategy. A punitive approach risks alienating allies and disrupting the very supply chains we are trying to build.
The global race for battery dominance is a marathon, not a sprint. By embracing a more proactive strategy on the policy front, the U.S. can create a thriving domestic battery industry that will not only power our clean energy future but also create high-paying manufacturing jobs and ensure our national and economic security for decades to come.