Join us for a series of updates about where the battery industry stands with respect to the Trump Administration’s tariff policies. Learn more about the impact on Chinese-related content, as well as initiatives from other countries incentivizing the battery industry worldwide!
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
The global battery industry, a critical enabler for everything from consumer electronics and grid-scale energy storage to industrial equipment and, of course, EVs, has been navigating a turbulent sea of tariff changes since the Trump administration took office in January of 2025. While much of the public discourse often centers on China, a complex web of U.S. reciprocal tariffs and other nations’ evolving trade policies has significantly reshaped supply chains, impacting raw material costs and manufacturing strategies worldwide, not just concerning China.
Today, we’re embarking on a series of updates on where the battery industry stands with respect to Trump’s tariffs. We’ll begin by summarizing what’s going on in the world, and then in the coming weeks, we’ll focus on China and Chinese-related content, as well as initiatives from other countries incentivizing the battery industry worldwide, ending with a conversation on what the future of domestic energy storage could look like in this new global context.
It’s an ever-changing geopolitical landscape, so join us to help make sense of what is happening on the tariff front!
China’s Grip on the Battery Value Chain
China’s dominance in the global battery industry is comprehensive, controlling significant portions of the entire value chain. The nation refines over 90% of the world’s graphite and more than two-thirds of its cobalt and lithium, giving it a strategic hold on essential raw materials. This control extends to component manufacturing, where China produces approximately 90% of anodes, 70% of cathodes, and 74% of separators. Consequently, China manufactures over 75% of the world’s lithium-ion battery cells and has been leading the charge on the commercialization of sodium-ion cells, solidifying its position as the undisputed leader in the global transition to electrification.
However, there are other countries that are important players in the energy storage industry in terms of both supply chains and manufacturing.
Beyond China: A Shifting Global Picture
The period from February to August 2025 has seen a dramatic shift in U.S. tariff policy. Prior to April 2, 2025, U.S. tariffs were generally very low, averaging around 2.2% across all imports, though specific products like steel and aluminum already faced Section 232 tariffs. On April 2, 2025, the U.S. formally introduced a new “reciprocal tariff” regime, starting with a 10% baseline tariff on most imported goods, which then evolved into individualized rates for numerous trading partners by July. The overall average effective U.S. tariff rate for consumers reached 18.4% by July 30, the highest since 1933.
Thus, the battery raw materials market in 2025 is characterized by considerable volatility, influenced by geopolitical tensions, Trump’s tariffs, supply chain disruptions, and fluctuating demand patterns. The increasing global demand for critical minerals, essential for battery technology, is projected to rise significantly by 2050 as the global transition to clean energy escalates.
The battery value chain exhibits high levels of concentration, both horizontally across stages and vertically through integrated companies. As previously mentioned, China, in particular, holds a dominant position in the processing and manufacturing of battery materials and components. This concentration creates vulnerabilities for nations heavily reliant on single-country suppliers.
With that in mind, let’s look at the greater global picture to see what we can glean from it.
While China plays a key role in the battery value chain, there are other countries that are important players in the energy storage industry in terms of both supply chains & manufacturing that could be affected by new tariffs.
European Union (EU):
The EU is rapidly expanding its battery manufacturing capacity with numerous gigafactories and is actively diversifying its critical raw material supply chains for minerals like lithium, cobalt, and nickel.
- U.S. Tariffs: Prior to April 2025, the average U.S. tariff rate on EU imports was low (~1.47%), though steel and aluminum faced a 25% tariff from February 10, 2025. Since April 2025, a trade deal effective August 1, 2025, set a 15% U.S. import tariff on most EU goods, including chemicals and semiconductors, a reduction from a previously threatened 30%. Strategic products like certain chemicals, semiconductor equipment, and critical raw materials will face zero tariffs. However, existing 50% tariffs on EU steel and aluminum imports remain unchanged, effective June 4, 2025.
- Impact on U.S. Battery Industry: The 15% tariff will increase costs for U.S. importers of EU-made battery components or materials not covered by exemptions. However, the zero-tariff agreement on critical raw materials is beneficial for U.S. battery manufacturers sourcing these foundational inputs from the EU, while the continued 50% tariff on steel and aluminum impacts battery casing and structural components.
Japan:
Japan is a significant player in the downstream battery supply chain, contributing 14% of global cathode material production and 11% of anode material production, along with other battery components. Panasonic is a major battery manufacturer.
- U.S. Tariffs: Prior to April 2025, U.S. tariffs were generally very low (~2.2%), with steel and aluminum imports facing a 25% tariff from February 10, 2025. Since April 2025, a trade deal effective August 1, 2025, set a 15% tariff rate on Japanese goods. Steel, aluminum, and copper products from Japan remain subject to a 50% tariff rate.
- Impact on U.S. Battery Industry: The 15% tariff on Japanese battery components (e.g., cathode/anode materials, separators) and finished cells will increase costs for U.S. battery manufacturers. The U.S.-Japan Critical Minerals Agreement aims to strengthen and diversify critical mineral supply chains (cobalt, graphite, lithium, manganese, nickel), which could lead to more secure, albeit potentially more expensive, sourcing for U.S. battery makers.
South Korea:
South Korea is a pivotal player in the global battery supply chain, leading in cathode material exports to the U.S. and Europe, and is a central hub for EV battery supply. Major manufacturers include LG Chem, Samsung SDI, and SK Innovation.
- U.S. Tariffs: Prior to April 2025, the average U.S. tariff rate on imports from South Korea was very low (~0.79%) under the FTA, with steel and aluminum imports facing a 25% tariff from February 10, 2025. Since April 2025, a deal effective August 1, 2025, set tariffs at 15%. The 50% tariff rate on aluminum, steel, and copper products remains in place.
- Impact on U.S. Battery Industry: The 15% tariff on South Korean battery components (e.g., cathode materials) and cells will increase costs for U.S. battery manufacturers. However, Korean-made batteries with compliant sourcing qualify for U.S. EV tax credits under the IRA, making them attractive despite tariffs. LG’s U.S. plant helps manufacturers circumvent tariffs on Chinese-made LFP cells, indicating a strategic shift towards U.S.-based production by Korean companies to avoid tariffs.
Emerging Battery Supply Chain Partners
India:
India is heavily import-dependent for critical battery minerals (lithium, cobalt, nickel), and over 84% of its lithium-ion battery imports come from China/Hong Kong. It is actively pursuing localization through initiatives like the National Critical Mineral Mission (NCMM) and Production Linked Incentive (PLI) Scheme for ACC manufacturing. Nash Energy is an Indian company.
Indonesia:
Indonesia holds the world’s largest nickel reserves and controls 54% of global nickel production. It has a “downstreaming” strategy requiring domestic processing of minerals and is pushing for an integrated EV battery production ecosystem, including a lithium-ion battery plant (JV with CATL) operational by the end of 2026.
Malaysia:
Malaysia is developing its battery component manufacturing capabilities, including a lithium-ion battery separator facility (Southeast Asia’s largest) and cylindrical cell manufacturing. It is also exploring extended producer responsibility (EPR) for EV batteries and recycling incentives.
Thailand:
Thailand is strategically positioning itself as a regional hub for EV and battery production, with potential lithium mining capabilities, and has attracted significant investments in battery plants.
Vietnam:
Vietnam is increasingly recognized as a potential hub in the global lithium battery supply chain, driven by EV demand and national renewable energy goals. It has large-scale battery manufacturing projects and substantial rare earth reserves.
Turkey:
Turkey is emerging as a competitive hub for EV manufacturing and lithium-ion battery recycling, with aspirations for closer integration into European supply chains. It possesses notable critical mineral reserves, including the world’s second-largest rare earth element reserve discovered in 2022. Pomega Enerji Depolama Teknolojileri is a lithium-ion battery importer.
South Africa:
South Africa possesses significant manganese reserves, supplying approximately 37% of global manganese ore, a critical material for various battery chemistries. Its battery storage market is projected for substantial growth, and it has local lithium battery manufacturers.
See the table below for a summary of the tariffs for each listed country.
Broader Impacts on Critical Minerals and Battery Supply Chains
The cumulative effect of these tariffs has been a significant increase in costs across the entire battery supply chain. Battery energy storage system (BESS) costs, for instance, surged by 56% to 69% since January 2025, potentially making the U.S. the world’s most expensive market for solar energy installations, which have been de-prioritized by the current administration. This directly impacts the deployment of renewable energy projects and grid stability.
This environment of extreme uncertainty has made strategic planning nearly impossible for businesses. Companies are forced to divert resources to contingency planning, which can impede innovation and operational efficiency across all battery applications. The increased costs on essential imported components, such as lithium, graphite, and copper, compress profit margins for battery companies, reducing resources for research and development (R&D) and slowing the commercialization of advanced battery technologies, including battery management systems (BMS) and energy storage solutions.
Furthermore, the U.S. has suspended the de minimis exemption for all low-value (under $800) shipments globally, effective August 29, 2025. This means that even small, low-value battery components or consumer electronics containing batteries will now be subject to full duties and regulatory requirements, adding administrative burden and cost for businesses and consumers alike.
In response, companies are pursuing diversification strategies, including a “China+1” approach to reduce over-reliance on single sources. International collaborations like the U.S.-led Minerals Security Partnership (MSP) are forming to strengthen critical mineral supply chains. Governments are also pushing to boost domestic production of critical minerals, for example, by guaranteeing price floors for rare earth elements and streamlining permitting for mining projects.
The Road Ahead
The past six months have underscored that tariffs are not merely economic tools but also instruments of geopolitical influence, creating a highly fragmented and unpredictable global trade landscape. For the battery industry as a whole—from grid storage and consumer devices to industrial applications—this means continued pressure on costs, a relentless drive towards supply chain diversification, and a critical need for policy coherence that balances protectionist aims with the imperative of fostering innovation and widespread adoption of battery technologies. Navigating this complex environment will require agility, strategic foresight, and a deep understanding of the evolving global trade currents.