US Battery Storage Industry Faces Significant Challenges from Import Tariffs, Analysis Reveals

New Analysis Reveals Challenges for the US Battery Energy Storage Industry Due to Tariffs
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Recent studies from Clean Energy Associates (CEA) and Wood Mackenzie emphasize the significant challenges the US battery storage market faces due to trade tariffs. According to Wood Mackenzie’s report titled “All Aboard the Tariff Coaster: Implications for the US Power Industry,” the impact of tariffs on imports will be more severe for battery storage compared to the solar PV or wind sectors.

This heightened vulnerability stems from the battery energy storage system (BESS) market’s heavy reliance on imported products from China. In fact, nearly all battery cells used in US utility-scale projects in 2024 are expected to originate from there. Depending on the severity of potential tariff increases, the cost of utility-scale BESS could rise between 12% and 50%, based on three different tariff scenarios analyzed by Wood Mackenzie.

Chris Seiple, vice-chairman of power and renewables at Wood Mackenzie, noted that although US battery cell manufacturing capacity is on the rise, the pace of this growth is insufficient to meet even a small fraction of the domestic battery project demand. “In 2025, we estimate that domestic manufacturing capacity will meet only about 6% of demand, with the potential to meet around 40% by 2030,” Seiple stated.

While battery storage is currently the sector most exposed to tariff risks, the solar PV industry is also at risk. Seiple remarked, “Existing tariffs on solar modules, combined with an inefficient transmission policy that inflates interconnection costs, have made construction costs for solar in the US higher than in many other markets. An increase in tariffs will only exacerbate the premium that US energy consumers must pay to access renewable energy.”

In a recent update to its quarterly “Energy Storage System Price Forecasting Report,” CEA highlighted that even with the current 90-day pause on US-China tariffs, total duties on Chinese battery imports remain above 40%. Once this pause expires, CEA warns that if the highest tariffs imposed by former President Donald Trump under the International Emergency Economic Powers Act (IEEPA) are reinstated, duties could exceed 150%.

The BESS industry does not solely depend on battery cells; it also relies on imports of components such as DC and AC blocks, which would experience significant price increases as well. Following the announcement of tariffs on April 2, 2025, China was initially targeted with a 34% tariff, which was subsequently raised to 84% and eventually to 125%. This, coupled with the initial IEEPA blanket tariff of 20% on all imported goods from abroad, results in a cumulative tariff exceeding 145%.

A deal reached on May 12 led to a temporary reduction of the China-specific IEEPA tariffs to 10% for 90 days, leaving a 30% tariff on all goods with China as the country of origin. Additionally, existing Section 301 tariffs on Chinese lithium-ion (Li-ion) batteries stand at 7.5%, set to increase to 25% at the beginning of 2026 for all Li-ion batteries, battery parts, and materials, alongside a 3.4% baseline ad valorem tariff. CEA calculates that tariffs on Chinese Li-ion batteries will be 40.9% until the 90-day pause ends, rising to 64.9% for the remainder of the year, and to 82.4% from January 2026 when the Section 301 tariff increases.

According to CEA, BESS cells, container bill of materials (BOM), and power plant components could be subject to up to five different tariffs, including those on steel imports from any country, as well as the impact of reciprocal tariffs on other countries involved in the supply chain, such as Canada and Mexico. Moreover, potential active anode tariffs could be imposed on companies importing from China under anti-dumping and countervailing duties (AD/CVD).

While US companies are actively seeking alternative supply sources, other countries producing BESS DC blocks and cells, including South Korea, Indonesia, Malaysia, and more recently Poland, are also likely to face substantial tariffs. During the current tariff rate period, CEA noted that Chinese OEMs might absorb some of the additional costs to maintain market share, though the long-term outlook remains uncertain.

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