What strategies can U.S. companies in the battery industry employ to help weather tariff uncertainty & become more resilient in the process? Read this article to explore 7 effective strategies for navigating tariff uncertainty!
Contact: Betsy Barry
Communication Manager
706.206.7271
betsy.barry@acculonenergy.com
The Battery Industry Faces a New Tariff Reality
The United States has recently implemented substantial duties on imported goods, particularly targeting those from China, which holds a dominant position in the global battery supply chain. For instance, the tariff rate on Chinese EV lithium-ion batteries saw a sharp increase from 7.5% to 25% in 2024, and was set to reach a combined rate of 173% by April 2025 going forward, only to be put on pause by the same administration that created the executive order to institute them in the first place. Non-EV lithium-ion batteries are also facing steep increases, with rates potentially reaching a combined 156%, tariff pause notwithstanding. Essential materials like nickel sulphate, manganese sulphate, phosphoric acid, iron phosphate, and synthetic graphite are also subject to these new tariffs if not exempted.
This escalation in costs has an immediate and tangible impact on the U.S. market. Industries relying on imported batteries, such as electric vehicle (EV) manufacturers and renewable energy companies, face significantly higher production expenses. This can lead to increased prices for consumers, potentially hindering the adoption of clean energy technologies and EVs, as well as non-EV commercial and industrial applications that are making the shift to alternative power sources, including LFP and Na+ battery systems. Existing supply chains, heavily concentrated in China, are disrupted, compelling companies to find alternative sources that are often more costly or difficult to secure at present. This volatility and uncertainty have already led to project delays and cancellations in the battery sector, and can discourage crucial investment as well as innovation in the battery industry at large.
While a primary objective of these tariffs is to stimulate domestic production and lessen reliance on China, the abrupt and significant cost increases present considerable hurdles for scaling up U.S. manufacturing, particularly before adequate domestic alternatives are fully established and operational.
Industry Strategies to Navigate Uncertainty
In response to this volatile environment, companies like Acculon and across the battery industry are employing a range of strategies to mitigate the impact of tariffs and supply chain disruptions. These strategies include:
- Supply Chain Diversification and Re-evaluation: Businesses are actively reviewing and restructuring their supply chains to reduce dependency on China, explore alternative options, and support domestic alternatives. This involves cultivating relationships and strategic partnerships with alternative vendors that are poised to create new opportunities as the U.S. moves away from Chinese content. Nations like South Korea, Japan, and countries in Southeast Asia are emerging as potential key players, and although their current production capacity may not be sufficient to entirely meet U.S. demand, new relationships could bolster an increase in capacity.
- Near-shoring and Domestic Manufacturing: There is a strong drive towards bringing critical technologies, including battery production, closer to the U.S. or within its borders. This aligns with the broader goals of industrial independence, which also supports domestic energy independence and resiliency. While building domestic capacity faces challenges such as high costs, limited infrastructure, and a need for skilled labor, investments in U.S.-based manufacturing are increasing, and some manufacturers like Acculon are accelerating onshore production to fill in the gap created by historic trends in the U.S. that favored overseas production. Companies are also increasing the proportion of non-Chinese content in their products–a trend that will only increase over time.
Amid uncertainty, one thing remains constant: the accelerating demand for energy storage solutions.
However, companies that embrace strategic flexibility, diversify supply chains, & invest in domestic capacity are not just hedging against risk, they are laying the groundwork for long-term resilience & leadership.
- Exploring Alternative Chemistries: The reliance on mature chemistries like LFP (Lithium Iron Phosphate), which are currently dominated by China, is encouraging exploration of alternative battery chemistries. Technologies like sodium-ion batteries, which have the potential to utilize domestically abundant materials, are being investigated as a long-term path to reduce reliance on foreign supply chains. For stationary energy storage, especially, sodium-ion battery systems offer a promising alternative to their lithium and lead-acid counterparts.
- Seeking Foreign-Trade Zone (FTZ) Status: As an important strategic tool, companies are exploring the benefits offered by Foreign-Trade Zones. FTZs are secure areas supervised by U.S. Customs and Border Protection (CBP) and are generally considered outside CBP territory for duty purposes upon activation. Companies can move foreign and domestic merchandise into FTZs for various activities like storage, assembly, or manufacturing. Formal CBP entry procedures and payments of duties on foreign merchandise are generally not required until the goods leave the zone and enter CBP territory for domestic consumption. This offers advantages such as duty deferral, reduction, or elimination, especially if goods are exported after processing within the zone. Companies may also avoid duties on defective merchandise destroyed within the zone with CBP approval. FTZs can also facilitate more streamlined customs procedures overall. Interest in FTZs reportedly increased during previous trade actions against China. Acculon is actively pursuing FTZ designation for its manufacturing facility to help navigate supply and price uncertainty and receive goods without incurring U.S. import duties, aiming to offer cost-stabilized solutions, particularly for customers involved in manufacturing or deploying products internationally.
- Leveraging Duty Drawback Programs: For companies exporting finished products that incorporate imported, dutiable materials, the U.S. CBP offers a duty drawback program. This allows for a refund of duties paid on imported goods when those goods (or articles manufactured from them) are exported. Companies increasing non-China sourcing and manufacturing in the U.S. can support customers in utilizing this program for battery-related duties on exported equipment.
- Adapting Messaging and Strategy: In the face of policy shifts, some companies are adjusting their public messaging to align with current political priorities, such as emphasizing “energy independence,” “national security,” and “American-made production,” rather than solely focusing on climate goals. While the underlying fundamentals of the clean energy transition remain strong (referred to as “climate capitalism”), the approach to communicating business value is adapting to accommodate current political priorities, ultimately demonstrating the multifaceted nature of the clean energy narrative—where economic competitiveness, national resilience, and environmental stewardship are increasingly intertwined in shaping both policy and corporate strategy.
- Delaying Investment Decisions: Due to the volatility and lack of clarity on long-term import duties, some companies and investors are delaying procurement and investment decisions until there is more certainty. However, with uncertainty also comes opportunity, and forward-looking firms may gain a competitive edge by strategically positioning themselves to adapt quickly once policy direction becomes clearer. The fact is that the advanced energy storage wave has crested, and will continue to despite geopolitical challenges. Those who act decisively now, rather than wait and watch on the sidelines, may shape the next phase of market leadership and influence the very policy frameworks that more cautious actors are passively awaiting to take form.
Charting a Resilient Course Forward
As the U.S. battery industry grapples with the challenges of an unpredictable tariff landscape, the path forward demands more than reaction; it calls for reinvention. While the policy environment remains fluid, companies that embrace strategic flexibility, diversify supply chains, and invest in domestic capacity are not just hedging against risk, they are laying the groundwork for long-term resilience and leadership. Tools like FTZ designation, duty drawback programs, and alternative chemistries offer tactical advantages, but the broader imperative is clear: adaptability and proactive engagement with evolving political and economic realities are becoming core competencies. Amid uncertainty, one thing remains constant: the accelerating demand for energy storage solutions. The companies that respond with clarity, courage, and calculated vision will not only weather the current storm but help shape the contours of a more robust, independent, and innovative U.S. energy future.