The reciprocal tariffs announced last week have introduced great uncertainty to the global economy. As stocks plummet and fears of recession increase, it is clear that no sector is spared from the volatility. Clean energy is no exception. Even as 2024 was a banner year for clean technology deployment in the United States with wind and solar generation reaching a record 17 percent of U.S. electricity generation and overtaking coal generation for the first time, utility-scale battery storage capacity increasing by 66 percent, and electric vehicle (EV) sales increasing over 7 percent to reach a record 1.3 million, the U.S. clean energy sector is now in limbo.
The tariffs add yet another layer of uncertainty to an already nervous sector that has been facing headwinds as the Trump administration touts a fossil fuel resurgence, issued an executive order substantially restricting onshore and offshore wind projects, froze funding from the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law (BIL), and called for a repeal of the IRA and associated tax credits.
Q1: What is the current state of clean tech manufacturing in the United States?
A1: The IRA spurred a boom in U.S. clean tech manufacturing between 2022–2024, resulting in more than $115 billion of private sector investments in battery, EV, solar, and wind manufacturing. Estimates are well over $200 billion when expanded to include investments in heat pumps, hydrogen, and minerals.
With the change of administration, even before the tariffs were announced, these trends were beginning to cool. EV battery manufacturing was on track to double in 2025, but some planned factories are already delaying or pausing construction, including for a $1.2 billion lithium-ion battery factory in Arizona. Across all clean manufacturing projects, a total of $7.7 billion was canceled in the first quarter of 2025, up from about $1.8 billion canceled in all of 2024. Similarly, only about $175 million in clean manufacturing projects were announced in January, well down from the typical $1 billion in new monthly projects announced over the last three years.
Q2: What will be the direct impact of tariffs on U.S. clean energy?
A2: Sweeping reciprocal tariffs, combined with the previous 25 percent aluminum and steel tariffs and any retaliatory tariffs, will directly increase prices across all clean energy technologies. While domestic manufacturing has been growing, it still lags far behind China’s capacity and represents just a fraction of U.S. demand.
The International Energy Agency estimates China accounts for between 40 and 98 percent of global manufacturing capacity for each key clean technology and component. The United States has become increasingly reliant on imported components for key clean energy technologies like solar panels, wind turbines, and batteries. China produces over 95 percent of the world’s polysilicon wafers, which are key components of solar panels. In 2024, the United States imported over 54 gigawatts of solar panels, with the vast majority sourced from Vietnam, Thailand, Malaysia, and Cambodia. Domestic manufacturers only supplied about 30 percent of the wind turbine blades installed in the United States in 2024. The previous year, wind-related equipment imports, including blades, drivetrains, and electrical systems, were valued at $1.7 billion, with 41 percent coming from Mexico, Canada, and China. Last year, the United States imported almost $24 billion in battery cells, primarily from China, Japan, and South Korea.
Q3: There have been tariffs on clean energy before—why is this different?
A3: Tariffs on clean energy goods are not new. In 2012, the Obama administration raised tariffs on Chinese solar panels and cells. Each successive administration increased those tariffs or expanded their scope. Despite those efforts, solar installers imported more, and domestic manufacturing lost market share.
The newly proposed-but delayed-reciprocal tariffs could slow deployment as they imply much higher rates and apply to more countries. In January 2025, importers paid a 50 percent tariff on Chinese solar panels and components. Under the series of tariffs from the beginning of the new administration, these rates have increased to 175 percent for finished Chinese solar panels and 195 percent for polysilicon, wafers, and cells. Meanwhile, the new tariffs will apply to two of the United States’ largest sources of solar: Vietnam at 46 percent and Cambodia at 49 percent, likely slowing U.S. deployment.
The newly proposed tariffs will make it more expensive to deploy clean energy technologies and reshore manufacturing to make them here, because the tariffs apply to other key inputs like cement, construction equipment, and electronic components. Steel and aluminum, which are also important manufacturing materials, had separately been tariffed at 25 percent in March. The result of this is that it is not only more expensive to manufacture the clean energy technologies themselves, but even building a new factory and outfitting it with specialized equipment will be significantly more costly. A final and critical difference for clean energy technologies is that the reciprocal tariffs are not being paired with support for domestic manufacturing. In fact, the opposite is true—funding from the IRA and BIL has been frozen, and there is a threat that the IRA tax incentives for both producing and buying domestic clean energy technologies will be repealed imminently.
Q4: What are the potential long-term implications for clean energy?
A4: Beyond the immediate cost implications for clean energy technology and the emissions implications of a decelerated transition, the reciprocal tariffs could have lasting medium- and long-term implications for the United States. The tariffs will make key traditional electricity system components, such as inverters and transformers, more expensive and difficult to obtain. This could delay crucial maintenance and expansion of the U.S. electricity grid at a time when demand is expected to grow, causing the grid to be less reliable and more vulnerable.
Additionally, the broader economic implications of the tariffs, combined with funding freezes in key Department of Energy and other programs, will make the United States a very difficult environment for clean tech innovation. While the focus of this piece has been on commercialized and scaled technologies, it is also important to keep our eye on new and emerging clean energy technologies. Without continued investment, the United States could quickly cede its leadership in innovation, with the opportunity cost of lost future global share of a quickly expanding market.
