The American Clean Power Association (ACP) has given the thumbs up to the Biden Administration’s decision on to impose Section 301 tariffs on lithium-ion batteries imported into the US from China, doubling the tariff rate to 50%.
The tariffs will be imposed on a wide range of Chinese imports including semi-conductors, batteries, EVs and solar cells, with the changes staggered to come into effect between 2024 and 2026.
“Today’s decision recognizes the value of battery energy storage and its importance to the reliability of our electric grid,” said ACP chief executive Jason Grumet.
He added: “As energy demand grows, battery energy storage is lowering costs for American families and businesses. Moreover, this emerging industry is building new manufacturing facilities and bringing thousands of jobs to communities across the United States.
“Newly enacted tax credits for energy storage, along with U.S. Department of Energy programs supporting the ramp up of domestic manufacturing, will continue to be critical to America’s energy dominance.”
Meanwhile, the global supply chain is braced for further disruption and increasing costs after President Biden’s announcement.
“The new tariffs under President Biden may be a case of history repeating. If so, businesses will be braced for increasing supply chain costs and ultimately it will be US consumers who pay for it,” said chief analyst at Norwegian market analytics platform Xeneta Peter Sand.
He added: “Back in 2018, we saw the US under President Trump impose a wide raft of tariffs on Chinese imports. China retaliated by imposing increasing tariffs of its own and this constant trading of blows saw ocean freight container shipping rates from China to the US West Coast increase by more than 160%.
“Rates began to fall away again towards the end of 2018 as the situation calmed, but they never returned to the same level, meaning a new status quo was established in the market at a higher cost level.”
Sand believes businesses may look to alternative supply chain routes into the US in light of the latest tariffs.
Growth in demand for container shipping imports from China into Mexico in the first quarter of 2024 had already increased by 34% compared to 12 months ago, fuelling suspicions it is being used by some shippers as a ‘back door into the US’.
Sand said: “The ocean freight container market has seen incredible increases in demand from China into Mexico and the latest US tariffs could see this rapid growth continue.
“In a purely hypothetical scenario, at the current growth rate, by the year 2031 there will be more containers imported from China into Mexico than the US West Coast.
“We may also see US shippers look to import goods from nations such as Vietnam as an alternative to China – as has increasingly been the case since the 2018 tariffs hike hit the market.
“However, these are immature supply chain routes compared to the established Transpacific trade direct from China to the US West Coast. This means more complexity, more volatility and increased cost.”