Impacts of Trump Administration Tariffs on the Battery Energy Storage System Market

Abstract 

Proposed tariff increases on Chinese lithium-iron-phosphate (LFP) battery imports threaten to disrupt the United States’ deployment of battery energy storage systems (BESS), a critical enabler of grid stability and the renewable energy transition. While the Inflation Reduction Act (IRA) has accelerated BESS adoption through investment tax credits, escalating tariffs—particularly the Trump administration’s proposed 125% levy—risk offsetting these gains by inflating costs and delaying deployment. Our analysis quantifies the potential impacts, finding that tariffs could reduce 2050 cumulative U.S. lithium-ion battery installations by 8% (25% tariff) to 38% (125% tariff), significantly hindering domestic storage capacity without materially affecting global adoption.

The study highlights the sensitivity of BESS deployment to both tariff levels and technological learning rates, with higher tariffs exacerbating declining adoption. Despite these disruptions, global lithium-ion battery price trajectories remain robust, aligning with industry projections (e.g., prices falling below $80/kWh by 2027–2029). However, data limitations—including sparse utility-scale BESS cost records and constrained lithium price histories—temper the precision of demand elasticity estimates. These gaps underscore the need for robust datasets to fully model BESS market dynamics under evolving trade and subsidy policies. Ultimately, the findings reveal a critical tension: protectionist measures risk undermining the very energy independence they seek to secure.