Trump Targets Chinese Wind, Battery and EV Imports, With Limited US Impact

Solar products were not included on the administration’s list of products that could be subject to new tariffs.

The U.S. solar industry breathed a sigh of relief yesterday when Chinese-made solar cells and modules were not included on a list of products that could be subject to new Trump administration tariffs. Inverters were also absent.  

Other clean energy technologies did make the list, but the U.S. market impacts appear to be modest. 

The U.S. Trade Representative published the catalog Tuesday, naming some 1,300 Chinese imports the administration plans to hit with a 25 percent tariff under Section 301 of the Trade Act of 1974.

Industrial robots, communication satellites and aircraft parts were among the products covered by the proposed tariffs, which are framed as retaliation for Chinese theft of U.S. intellectual property and other unfair trade practices.

Certain Chinese wind power and battery products could also be subject to trade sanctions, as well as a motor cited as “primary source of mechanical power for electric vehicles.” However, USTR trade data shows these products make up a relatively small share of the U.S. market.

In the first case, the administration is specifically targeting “wind-powered electric generating sets.” According to the U.S. Department of Commerce’s Trade Policy Information System database, Chinese-made wind products included on the tariff list made up 25 percent of U.S. imports in 2017, representing just $53.3 million.

The USTR document does not specify if the tariffs apply specifically to wind turbines or wind generators. However, the $53 million figure generally aligns with the value of wind turbines imported to the U.S. from China in 2017, said Aaron Barr, principal consultant at MAKE Consulting. That amounts to between 30 and 75 turbines, depending on scope and size.

Chinese manufacturers have been angling to enter the U.S. market for several years. However, MAKE data shows imported Chinese turbines have only contributed 330 megawatts cumulatively to date, which represents less than 0.5 percent of the total U.S. fleet.

It’s a similar story for batteries.

“The impact on the battery industry will be minimal, as the parts included in the list are mostly related to primary (non-rechargeable) batteries,” said Ravi Manghani, director of energy storage at GTM Research.

The specific energy storage imports that could be subject to new tariffs are: nickel cadmium batteries; lead acid batteries; and battery parts, including separators.

According to Manghani, nickel cadmium batteries are primarily used in power tools and consumer electronics and have been largely phased out of other applications. Tariffs on lead acid batteries would have a fairly significant impact on companies like Johnson Controls and Exide, but are less of a concern for the cleantech sector.

The administration’s proposed tariffs on battery parts would apply to most lithium-ion battery parts, said Manghani. However, per U.S. trade data, China only supplies 3.15 percent of all U.S. imports in this category, totaling $45 million in 2017.

That’s a pretty small number, Manghani said. Plus, U.S. manufacturers have multiple alternatives from Japan and South Korea.

The Energy Storage Association issued a statement Wednesday noting that the inclusion of Chinese battery components in the Trump administration’s proposed Section 301 tariffs will “likely represent a negligible impact on the growth of the energy storage market.” However, ESA is concerned the battery tariffs will still create unnecessary uncertainty.

“If these tariffs are adopted, the companies and people who plan, build and service battery storage facilities will be faced with risk that may inhibit storage deployment, even as the U.S. looks to strengthen its energy infrastructure and enhance resilience,” said ESA CEO Kelly Speakes-Backman. 

EVs are another cleantech sector that could be affected by new tariffs, with a proposal to include imports of DC motors with an output of less than 75 kilowatts. The USTR noted these products are used for mechanical power in electric cars. However, that market appears to be very small and likely applies only to small vehicles like golf carts. China provided 63 percent of imports of these DC motors in 2017, which represented just $3 million.

The Section 301 investigation, which is now open for public comment, has contributed to rising tensions between the U.S. and China. Beijing responded to the Trump administration’s tariff product list Wednesday by announcing similar duties on key American imports including soybeans, planes, cars and chemicals. The Trump administration has since proposed launching trade talks.

Earlier this year, the president slapped import tariffs on solar panels under a Section 201 trade case brought by Suniva and SolarWorld Americas. That case continues to play out as U.S. companies that rely on foreign-made products seek tariff exemptions. 

The White House also announced tariffs on steel and aluminum, which stands to negatively impact the solar, wind and energy storage industries. Automakers will be among the hardest hit, which could cause vehicles, including EVs, to become more expensive.

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