The U.S. trade policy on lithium batteries from China continues to evolve, with significant adjustments to import tariffs on lithium iron phosphate (LiFePO4) forklift batteries in 2025. As of April 2025, the total tariffs range from approximately 70% to over 170%, depending on the battery type and classification. The U.S. cites China's trade surplus with America as the reason for imposing tariffs on all Chinese goods exported to the U.S. Meanwhile, although the comprehensive tariff rate on energy storage batteries is set to rise to 82.4% by 2026, with the addition of "reciprocal tariffs," the combined rate will reach a high of 57.4% starting April 9, 2025, potentially disrupting the supply chain landscape ahead of schedule. Industry experts indicate that this tariff rate will significantly reduce the price competitiveness of Chinese lithium battery products in the U.S. market, squeeze profit margins for exporters, and force some companies to accelerate adjustments to their overseas market strategies.
It has been observed that U.S. imports of lithium-ion batteries for electric vehicles from China fell by 59% year-on-year in February, a direct consequence of the ongoing tariff hikes.
Tesla, Rivian and other car companies relying on Chinese batteries may face a 5-10% cost increase, and the selling price of some models may rise.
Slow expansion of U.S.-based battery factories: despite IRA subsidies, it will take 3-5 years to build new factories, and it will be difficult to replace Chinese supply in the short term.
The U.S. plans to realize 100% clean power by 2030, and the industrial supply chain of U.S. battery storage systems is highly dependent on the Chinese supply chain. Therefore, the impact of tariff increases on the U.S. battery storage industry will be rapid and obvious, and even existing projects will be forced to shelve due to tariffs.
Positive: Potential creation of more battery manufacturing jobs, such as at Ford's BlueOval plant, a joint venture with SK On.
Negative impact: If the cost of batteries is too high, it may lead to a decline in demand for electric vehicles, which in turn will hurt the U.S. new energy industry.
The impact of the U.S. tariff increase on China's LiFePO4 battery industry shows a clear duality, which brings severe challenges and creates important opportunities for transformation and upgrading.
In terms of negative impact, the industry will face a significant impact in the short term. High tariffs directly weaken the price competitiveness of China's lithium battery products, which is expected to lead to a decline in exports to the United States by 30%-40%.
Enterprise profitability space is squeezed, the industry's average gross margin may fall 3-5 percentage points, second-line manufacturers are facing survival pressure. In order to avoid tariffs, enterprises have to increase re-export trade or build factories overseas, which not only pushes up additional costs by about 15%, but also causes problems such as declining capacity utilization and inventory backlog.
However, on a positive level, this external pressure is being transformed into a powerful force for industry transformation and upgrading. Tariff barriers are forcing enterprises to increase R&D investment, and the R&D expense ratio of head enterprises is expected to rise to 8%-10%, accelerating the industrialization process of sodium batteries.
In terms of market layout, enterprises are actively exploring emerging markets such as Europe and the Middle East, and exports to Europe are expected to grow by 40%-50%, effectively hedging against the decline of the U.S. market. What is more noteworthy is that the industry is experiencing a profound pattern of reshaping, the next three years, the head of the enterprise plans to add 100GWh overseas production capacity, through the globalization of the layout to avoid trade barriers.
The current challenges are prompting the entire industry to shift from price competition to value competition. Enterprises no longer rely solely on cost advantages, but pay more attention to technological innovation and brand building. After this round of adjustment, the surviving enterprises will be more resilient and competitive, and the development quality of the whole industry will be significantly improved.
U.S. tariffs will push up the cost of batteries in the short term, affecting various industries, but in the long term, it may accelerate the reorganization of the global supply chain. Chinese lithium battery companies are still competitive, but need to adjust their strategies to deal with trade barriers. The real challenge is how to secure the supply chain without hindering the global clean energy transition.
