How the U.S.-China Trade War Could Derail the Energy Transition

Noah Gordon

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The trade war is a fast-moving and chaotic story. At the time of publication, the United States has imposed tariffs of 145 percent on most Chinese imports, and China has responded by slapping 125 percent tariffs on U.S. goods. But Washington has carved out exemptions for some items, such as copper, pharmaceuticals, semiconductors, laptops, and smartphones. A Chinese-made lithium-ion battery now faces a tariff at the U.S. border, but putting that battery inside a Chinese-made laptop would exempt it. Washington has also put 25 percent tariffs on steel and aluminum imports from all countries.

The exact rates for various countries and sectors could change quickly, as the White House has proven willing to delay tariffs or grant exemptions to suit the politics of the day. But despite the flux, the contours of the new U.S. economic landscape are becoming clear, especially for clean energy industries, where China is the dominant global supplier. Below, we address several key questions on how the trade war could affect the U.S. move toward clean energy.