Tariffs threaten global green push

Trade barriers hike costs, curb transition to a low-carbon economy, experts warn

High tariffs imposed by the United States on clean energy products could hamper the development of its new energy technologies, negatively affecting both U.S. and global green energy sector and consumers — posing a setback to the worldwide transition to a low-carbon economy, experts warn.

Last month, U.S. President Donald Trump imposed new “reciprocal tariffs” on a wide range of goods. Shortly afterward, the government announced exemptions for certain electronic goods, including solar cells and other clean energy products, aiming to alleviate concerns over rising costs in technology and renewable energy sectors. Yet, by that time, companies and consumers had already felt the chill.

According to the U.S. International Trade Commission, about 75 percent of the country’s solar cells and modules were imported last year, worth more than $16.5 billion.

A recent report from Wood Mackenzie, an energy consultancy in the United Kingdom, showed that these tariffs are expected to push U.S. utility-scale solar project costs up by 10 percent. These are primarily driven by about 30 percent jump in module and inverter costs, as solar components sold in the U.S. are heavily imported, especially from Asia.

Leslie Abrahams, deputy director of energy security and climate change at the Center for Strategic and International Studies in Washington, said in a report that while U.S. domestic clean energy manufacturing is expanding, it still meets only a fraction of national demand. As a result, the country remains heavily dependent on imported components for critical technologies.

“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,” she said.

Xiang Liu, a researcher at the Sichuan Academy of Environmental Policy and Planning, told China Daily that the U.S. government hopes that tariffs will not lead to direct price increases domestically, but will instead be absorbed by traders. However, in reality, many domestic export enterprises have already said that they will not shoulder these additional costs themselves. Therefore, from an economic or business standpoint, it is inevitable that the burden will ultimately be passed on to U.S. consumers.

“The implementation of ‘reciprocal tariffs’ will exacerbate inflation in the U.S.. Prices of products such as photovoltaic modules, wind turbines, electric vehicles, battery materials and green ships are expected to rise drastically,” Xiang said.

“This will create invisible barriers to consumer access to a broader range of green and low-carbon products, increase the cost for U.S. companies striving for carbon neutrality, and hinder the green transition in key sectors like energy and transportation.”

In addition to the price increases, the trade tensions have already dragged down investment levels in the clean energy industry in the U.S..

An April report from the Center for Strategic and International Studies said more than $7.7 billion of U.S. clean technology manufacturing projects were canceled in the first quarter, and new project announcements collapsed. Now, the new tariffs have made things worse.

Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University in Fujian province, said the U.S. lacks a complete manufacturing chain for solar products, and its domestic production capacity is expanding at a sluggish pace. As a result, the country may face short-term supply shortages and price volatility triggered by the tariffs.

“Amid current policy uncertainty, massive new investments in the U.S. clean energy sector are unlikely. The lack of aligned incentives and consistent long-term policies further complicates the outlook, potentially deterring both domestic and foreign investors,” Lin said.

The Trump administration has argued that tariffs are essential in boosting investment in domestic capacities and bringing back the manufacturing industry, after years of “U.S. industries and jobs being sent overseas”, he said.

Nick Iacovella, who served as an aide to U.S. Secretary of State Marco Rubio and is now the executive vice-president of the Coalition for a Prosperous America in Washington, said, “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.”

Lin agreed, saying Trump aims to use tariffs to fully establish domestic clean energy manufacturing. “However, building such capacity is a long-term process that could take a decade or more. It seems more like a political gesture, which cannot deliver real effect.”

‘Bullying’ approach

According to an April survey by CNBC, more than half of respondents said reshoring manufacturing to the U.S. is expensive, with some characterizing the Trump administration’s approach as “bullying corporate America”. Wood Mackenzie even expected layoffs and factory closures as demands drop.

“By bringing manufacturing back home through high tariffs, the U.S. is risking undermining market expectations for green and low-carbon investments,” Xiang from Sichuan said. “It could disrupt the global division of labor and supply chains in green industries, negatively affecting investment, trade and stock performance in the sector, ultimately driving up the cost of clean energy development.”

Since the Industrial Revolution, the U.S. has released more heat-trapping gases than other countries. As of 2021, it had been releasing about 5 billion metric tons of carbon dioxide per year, which was about 13.49 percent of the total global emissions, according to the U.S. National Oceanic and Atmospheric Administration. Given this outsized legacy, the U.S. bears a critical responsibility in leading global climate efforts.

However, its recent imposition of tariffs on clean energy components, along with a broader retreat from climate action, threatens to undermine the global transition to a low-carbon economy, experts said. These policies not only raise costs but also send discouraging signals to the international community.

“Tariffs hinder the research, development and deployment of technologies such as carbon capture and storage, weaken the competitiveness of emerging industries like clean energy and electric vehicles, and pose obstacles to global green trade and the sustainable upgrading of production and supply chains,” Xiang said.

The “reciprocal tariffs” of the U.S. and the economic shockwaves they generate could erode the determination of some countries and companies to pursue green transformation and investment, he said.

“They risk pushing climate change down the global governance agenda and increasing uncertainty around how countries will raise their climate ambitions and reach broader international consensus.”