How trade wars impact the green transition — What we know so far

What do tariffs mean for the energy transition?

US President Donald Trump’s tariffs are rippling around the world like a boulder dropped in a pond. He announced on Wednesday blanket tariffs of at least 10% on all countries, with many seeing rates that are much higher.

The exact impacts on the energy transition will take days if not weeks to tease out. But there are some indications of what the tariffs will mean in the US and for the rest of the world. To pick up the signal through the noise, I spoke with BloombergNEF’s head of supply chains and trade Antoine Vagneur-Jones. Here are a few takeaways.

China will export more clean tech — to low- and middle-income countries. China faces a stiff penalty with Trump’s new tariffs of 34%, which comes on top of a 20% hike earlier this year. And that comes on top of tariffs former President Joe Biden leveled on Chinese solar panels last year. The country also faces surcharges on other carbon-cutting products like electric vehicles and batteries.

Soon after Trump’s announcement in the White House Rose Garden, Vagneur-Jones said in a WhatsApp message that the tariffs “will speed up a recent trend of China exporting more to middle and lower income countries.” From 2022 to 2024, the share of Chinese exports of EVs, wind turbines, solar panels and lithium-ion batteries to those countries rose rapidly, according to BNEF.

Solar panels will be caught up in the trade war. The tariff rates for “several Southeast Asian countries” are “pretty devastating,” Vagneur-Jones said. That’s also where most US solar imports come from, with Vietnam being a top supplier. The country was hit with a 46% tariff while Cambodia and Thailand — also notable exporters — saw surcharges of 49% and 36% respectively. The US imports vastly more panels than it makes.

India stands to benefit. The country got off relatively light compared to China and Southeast Asia, with a tariff rate of 26%. That comes as it ramps up clean tech manufacturing capacity, including recently working to finalize a $1 billion subsidy to grow the solar industry.

India increased its solar exports to the US in the past two years, with 9.4 gigawatts of cells and modules from the market, worth $3.4 billion, reaching the US in 2023 and 2024 combined, according to customs data. This compares with very low levels in previous years.

With higher tariffs on Vietnamese and other panels, India may have an opening. “The lower duties could potentially boost future exports,” Vagneur-Jones said.

But ultimately nobody wins. The world needs to speed up the energy transition to avert the worst impacts of climate change, not throw up hurdles. But the tariffs are essentially throwing up entire walls that will impact all industries, particularly those that rely on supply chains going back to China and other countries. (Which is to say nearly all industries.)

While the tariffs in theory are designed to bolster US manufacturing, “extreme volatility puts firms off putting money down for assets with a 20-year depreciation timeline, and inflating the cost of inputs makes scaling manufacturing considerably harder,” Vagneur-Jones said.

US clean-tech, grid equipment and battery metal imports by sector in 2024