April 2, 20258 min readTrumps Tariffs Are Expected to Undermine the Clean Energy TransitionNew Trump administration tariff son imported goods could exacerbate a shortage of parts used by the energy industryPresident Donald Trump delivers remarks on auto tariffs and other topics on March 26, 2025 at the White House. Mandel Ngan/AFP via Getty ImagesCLIMATEWIRE | Its tariff day in America.What form the new levies take remains to be seen, but this much is clear: President Donald Trumps drive to impose tariffs on a broad range of imported products represents a new world order, one where America increasingly looks inward to make the goods it needs.That kind of transformation would almost certainly affect the global transition to green energy. One possible outcome: China might be forced to branch out and find new markets for its clean energy technology, accelerating their adoption. But major downsides are just as likely, analysts said, even as they acknowledged it is too early to predict the unintended consequences that could result from Trump's moves.On supporting science journalismIf you're enjoying this article, consider supporting our award-winning journalism by subscribing. By purchasing a subscription you are helping to ensure the future of impactful stories about the discoveries and ideas shaping our world today.It just seems like where we are headed is totally uncharted, said Noah Kaufman, a climate economist at Columbia Universitys Center on Global Energy Policy who served in former President Joe Bidens administration. I feel very ill equipped to predict what the consequences could be.Trump has labeled Wednesday Liberation Day, arguing tariffs are needed to drive investment in domestic manufacturing after decades of outsourcing U.S. industries and jobs. Many energy analysts say the move threatens to raise prices for electricity, automobiles and gasoline.Guessing the tariffs form has become something of a Washington parlor game. One source with knowledge of the administrations thinking said the president is gravitating toward a flat universal rate on a broad range of imports. But Trump also has publicly flirted with imposing reciprocal tariffs on America's largest trading partners.Theyre reciprocal, Trump told reporters at the White House on Monday night. Whatever they charge us, we charge them, but were being nicer than they are.Karoline Leavitt, the White House press secretary, told reporters Tuesday that the president had made his decision and would announce it at a Rose Garden press conference Wednesday.However they look, the new tariffs amount to the latest in a series of new duties Trump has imposed or threatened to impose on foreign goods since taking office in January.Twenty-five percent tariffs on Canadian and Mexican imports are scheduled to take effect Wednesday after Trump last month postponed their implementation. They follow on the heels of a new 25 percent duty placed on foreign automobiles last week and a 25 percent levy on imports of steel and aluminum established in February.Trump sought to impose tariffs on foreign goods in his first term, many of which Biden kept in place as he looked to counter Chinas manufacturing dominance. But the duties proposed by Trump since he returned to the White House go far beyond that, upending the global economic integration the United States has championed for decades.The global approach has bled over into climate efforts and the energy transition. Americas booming solar industry, for instance, has largely been supplied by Chinese panel makers operating in southeast Asia.Predicting the impact of this round of Trumps tariffs is difficult because they deliver a hammer blow to both traditional energy industries, such as oil and gas, and relatively new ones, like renewables.When the Federal Reserve Bank of Dallas released its quarterly survey of oil and gas industry executives last week, the word "uncertainty" was mentioned 13 times. That's the most since the first quarter of 2020 when Covid-19 began spreading around the world, according to an analysis by the American Petroleum Institute.The administrations tariffs immediately increased the cost of our casing and tubing by 25 percent, one executive told the bank.It was a similar story in the manufacturing sector, which contracted in March, according to a monthly survey released Monday by the Institute for Supply Management. Companies reported higher prices, fewer new orders and declining employment in large part due to uncertainties over the tariff environment.Energy industry already dealing with shortagesTariffs stand to exacerbate shortages of key components used by the energy industry, analysts said.A shortage of electrical components such as transformers, circuit breakers and switchgear has persisted for 54 consecutive months, according to ISM. And that's hampered efforts to keep up with rising electricity demand from data centers.Some utilities responded by sourcing equipment from overseas a strategy that looks increasingly risky, Wood Mackenzie wrote in a January analysis of the potential impact on tariffs.Transformer manufacturing might not seem like a big deal in the context of containing runaway carbon dioxide emissions or satisfying the energy demands of technology companies. But shortages of key electrical components have slowed the integration of renewables and other new power plants on the grid, limiting the number of data centers that can plug in, analysts said.This isn't a thing which is just good for renewables, bad for fossil fuels, or good for fossil fuels, bad for renewables, said Antoine Vagneur-Jones, head of trade and supply chains at BloombergNEF. It's a period of massive uncertainty, and that's difficult for businesses to navigate wherever you're sitting.The United States free trade agreement with Mexico meant that companies from a range of industries set up shop south of the border in an attempt to access the worlds largest economy while benefiting from lower labor costs.The U.S. imported $31.3 billion worth of wire and cable in 2024, and 52 percent came from Mexico, according to Ken Roberts, the chief executive of WorldCity, a data-tracking firm. Another $29.2 billion worth of power supplies and transformers came in last year, with 21 percent coming from Mexico and 13 percent from China. And $13.3 billion worth of electric motors and generators were imported, with 32 percent coming from Mexico and 13 percent coming from China.Automakers like General Motors, Honda and Ford, meanwhile, have spent decades building an interconnected supply chain that stretches across North America.The vehicles they assemble in the United States typically contain a large number of parts from Mexico, Canada and other countries, and they also build vehicles in Mexico and Canada with parts from the United States. Some American automakers most popular electric vehicles are assembled in Mexico, including Ford Mustang Mach-E, Chevrolets Equinox and Hondas Prologue.Trumps plan runs the risk of creating a spiral, where Mexico and other countries impose their own tariffs, prompting tit-for-tat responses, said Enrique Milln-Meja, a senior fellow for economic development at the Atlantic Council's Adrienne Arsht Latin America Center.That's where, in reality, a trade war starts, and that's when everybody loses, he said.Trump and his allies say that tariffs are needed to reverse decades of outsourcing that decimated manufacturing communities across much of the United States. They contend new duties on imports will force companies to invest in U.S. manufacturing facilities in order to access the worlds largest economy. And they argue the approach is already bearing fruit.As evidence, the White House has touted investments such as Hyundais plan to invest $21 billion in U.S. automobile factories and Schneider Electrics plan to spend $700 million on expanding its U.S. operations. Schneider Electric, a French company, is one of the worlds largest makers of equipment for the power sector.When I think about what is the vision of the Trump trade and tariff agenda, it's bringing back American manufacturing, creating jobs and passing the tax policy that primarily benefits working class people, said Nick Iacovella, who worked as an aide to Secretary of State Marco Rubio when he was in the Senate and now serves as executive vice president at the Coalition for a Prosperous America.Tariffs would raise revenue to pay for the extension of Trumps tax cuts, Iacovella said. He expressed hope the president would impose a universal rate on imports rather than adopting a reciprocal approach.A reciprocal tariff strategy that is primarily focused on other countries lowering their trade barriers and prioritizing market access that's essentially a free trade agreement, he said. You know, we've done this policy for like three decades. It doesn't work.U.S. Rep. John Moolenaar, a Michigan Republican who serves as chair of the Select Committee on the Chinese Communist Party (CCP), said tariffs are needed to counteract years of unfair trade practices in China.There's nothing normal about our trade relationship with China, Moolenaar told an industry summit in Washington on Tuesday. They will subsidize, they will steal technology IP, they have all sorts of unfair trade practices. And so we need to recognize that, just acknowledge that, and then reset the relationship so there's a very different expectation, and I think that's what President Trump's tariffs are going to do, is to force this negotiation to reset this trading relationship.China may seek new buyers for clean energy techSome of Trump's actions could rebound in ways that could benefit the transition to clean energy.China, whose economy increasingly depends on the production of clean energy technology, will be motivated to find new markets as its shut out of others by tariffs, sparking a solar boom in Pakistan or a jump in EV sales in Brazil, analysts said.A growing share of Chinese exports of batteries, solar panels, wind turbines and EVs are going to countries the World Bank classifies as lower or middle income, said Vagneur-Jones, the analyst from BloombergNEF.So you start to see these sort of knock-on effects, and then you could conceivably see a world where the energy transition starts to accelerate slightly in some of those poorer countries where it was seemingly more of a rich country thing, he added.But most analysts took a dimmer view, saying it would take companies years to readjust their supply chains and push up prices on energy, automobiles and consumer goods.Tariffs could add 15 percent to the average cost of vehicles, and companies will have no choice but to raise prices, said Sam Abuelsamid, vice president of market research at Telemetry Insight, a research firm that tracks the auto industry. The higher prices could drive down sales and lead to factory closures and layoffs.You cant just move production from one factory to another in a matter of weeks, he said in an interview. Youre talking years of pain before you potentially get to a positive place.In the utility industry, it will take years for manufacturers to bring new factories online needed to make equipment such as transformers and circuit breakers, said Rob Gramlich, president of Grid Strategies, a Washington D.C.-based consulting firm.Expecting companies to bring enough manufacturing capacity online to keep up with growing electricity demand projections is just not a reasonable timeframe to plan more facilities, he said. I think the tariffs are mostly just raising the cost to U.S. utilities and then their rate payers.Even sectors that have traditionally viewed tariffs as a means of bolstering domestic manufacturing are feeling uncertain. U.S. solar manufacturers have been pushing for targeted tariffs combined with tax credits and other incentives like those contained in the Biden administrations Inflation Reduction Act.The U.S. has boosted its production of solar modules since the IRA went into effect, growing from 14.5 gigawatts of production in 2023 to 50 GW in early 2025, according to a Wood Mackenzie report conducted for the Solar Energy Industries Association.But those modules are still mostly made with imported components. Whether it will be cheaper to import entire solar modules rather than individual components likely will depend on the size of the tariffs and how theyre implemented. It also hinges on whether Congress maintains tax incentives for domestic manufacturers under the IRA.Tariffs can be a part of the solution set, but they're not necessarily dependable enough that you can invest against them, said Michael Carr, executive director of the Solar Energy Manufacturers for America Coalition, which advocates for policies that support a U.S.-based solar supply chain.Dan Anthony, president of Trade Partnership Worldwide, a trade and economic research firm, said the tariff impact on U.S. solar panel production, ultimately would depend on how high the new levies are and if American producers face higher costs for imported materials.Higher costs for imported finished panels dont help production if U.S. costs rise just as much due to tariffs on imports, he wrote in an email.Even if the final cost of U.S.-produced panels doesnt rise as much as imported ones, he added, Americans may still choose to install fewer solar panels due to higher costs for the panels themselves or other purchases, such as cars, that are affected by tariffs.Reprinted from E&E News with permission from POLITICO, LLC. 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