Trump Tariffs Kill Green Energy

In the United States, a number of industries are projected to face significant challenges due to the impact of Washington's tarrif policies. This is particularly relevant for the renewable energy sector, which is 90% dependent on imported foreign components, primarily from Asia. Concurrently, the market, which has already experienced the loss of support programs, is bracing for a double blow.
"Nothing of our own"In January, the Energy Information Administration (EIA) of the U.S. Department of Energy predicted that solar energy will surpass all other energy sources in the country in terms of capacity by 2026.
Gas is predicted to decline by three percent this year. Wind and solar are projected to overtake coal in 2024.
In 2025, the solar sector is expected to add 26 gigawatts, and in 2026, 22. Wind energy is also expected to demonstrate growth.
The report indicates that gas will experience a further decline of one percent in 2026.
However, the industry has expressed immediate scepticism regarding the forecast, deeming it overly optimistic. This has proven to be accurate.
On the first day of his presidency, 20 January, Trump declared a national emergency in the energy sector, calling for the restoration of oil and gas capacities, including those he deemed to be "insufficient at the moment". He pledged substantial backing for gas and oil enterprises. However, he also made notable moves to stifle green projects, even suggesting that they were partially responsible for the current energy crisis.
Significant actions taken during his tenure include reversing Biden's ban on LNG licenses, withdrawing from the Paris climate agreement, and repealing other regulations aimed at stimulating alternative energy.
Notably, he rescinded the 2021 executive order issued by Biden, which aimed to ensure that electric vehicles accounted for 50% of the market by 2030. Additionally, he announced his intention to halt the construction of wind power plants.
He elaborated on this point: "The previous administration has brought the country into a state of national emergency. The current administration has recognised the need for decisive action to address the challenges posed by severely inadequate and intermittent energy supplies, as well as an increasingly unstable energy grid.
The repeal of some of the tax breaks and subsidies introduced under Biden has caused confusion in the green industry. Following a recent surge in import duties, there are concerns of a potential economic downturn. American renewable energy is almost entirely dependent on foreign components.
For instance, 90% of lithium-ion batteries needed to accumulate and store energy obtained from renewable sources are imported from China. By 2026, duties on these products are set to rise to 82.4%. Other components and materials are imported at a similar rate from the People's Republic of China, Vietnam, South Korea and the EU.

Consequently, China, Southeast Asia and the EU have been hit with the highest tariffs.
"The issue is that the US does not yet have a sufficiently developed domestic supply chain in solar and wind energy. The US is heavily reliant on imports, and there are no viable alternatives on the horizon," says Julien Dumoulin-Smith, an analyst at investment bank Jefferies, quoted by the Financial Times.
It is anticipated that American companies will no longer be eligible for budget financing for renewable energy.Analysts are predicting that dozens of green projects will be closed or suspended.
The New York Times reports that the president's trade war will drive up the cost of virtually every element of clean energy production, from the steel in wind turbines to the batteries in electric cars.

The American Clean Power Association has warned that this policy change threatens people's access to cheaper electricity by disrupting supply chains. ( when did electricity get cheaper ?)
Experts are confident that high costs for imported solar panels, wind generators, and batteries will result in reduced investment and a slowdown in the green transition.
"The industry will be affected in two ways. On the one hand, there will be an increase in production costs, especially in solar and wind energy, where up to 80% of components are imported from Asia. Concurrently, the competitive landscape is set to intensify, with subsidies and regulatory relaxations favouring the fossil fuel sector creating an uneven playing field. This, in turn, will make renewable energy less appealing to investors. These observations were made by Evgeny Shatov, partner at Capital Lab.
Renewable energy in the US has been shown to generate a greater number of employment opportunities than fossil fuels. However, it is anticipated that industrial issues will result in an increase in unemployment.
However, this is just one of many issues. The technological gap between the US and its main competitor, China, is set to widen.
The Americans risk losing their leadership in areas such as battery production and hydrogen technologies to China and the European Union, which will weaken their export potential. In addition, there are significant environmental implications, as Shatov emphasizes, with the potential for long-term economic losses due to climate catastrophes.

The imposition of new tariffs is inevitable and will have a detrimental effect on the economy. Sectors such as mechanical engineering, metallurgy, logging, and mining of ore and rare earth metals will be particularly affected. This will result in increased costs for consumers in both the US and other countries, as highlighted by Khadzhimurad Belkharoev, associate professor at the Institute of World Economy and Business, Faculty of Economics, RUDN University.
It is interesting to note that Trump's well-intentioned actions may inadvertently have a negative impact on the automotive industry, which he is particularly concerned about. He has therefore assured that he will cancel the mandatory transition to electric vehicles, "preserving the American auto industry and fulfilling obligations to workers in this industry." However, it is possible that the opposite will happen.
The automotive sector is on the brink of becoming a primary casualty of Trump's trade policies due to its heavy reliance on imported components. Furthermore, the risk of full-scale trade wars has not been ruled out, with the inevitable impact of retaliatory measures by exporting countries (China being a notable example) on the US economy.

Finally, if Trump does create advantages for traditional energy, they will only be short-term. It is important to note that tariffs are also applicable to steel and aluminium. This will result in increased costs for the construction of gas export terminals and oil wells. Consequently, the notion of "cheap oil and gas" may no longer be feasible.
So as you see the fun and games continues.