Tariffs, quotas, and trade restrictions
Countries are increasingly imposing tariffs and quotas on battery components and raw materials. For example, the U.S. is expanding Section 301 and Section 232 measures targeting imports from China, which affects critical battery components.
Export bans and material restrictions
Beyond tariffs, export bans on certain minerals or chemical processing steps are being used as strategic levers. Such restrictions make upstream supply volatile, especially when dominant suppliers tighten control.
How Protectionism Raises Costs
Tariff effects on battery components and cells
Tariffs on imported cells or components - including those from China - directly raise the cost of industrial battery modules and storage systems. Wood Mackenzie estimates certain tariffs could increase project-level costs by 12% to over 50%, depending on scale.
Upstream cost increases: raw materials, steel, etc.
Steel tariffs hit battery enclosures and racks. Tariffs on materials (active anode/cathode components) or bans on certain materials can force buyers onto more expensive sources, boosting cost per kilowatt-hour.
Policy Dynamics & Incentives
Domestic stimulus & tax credits (e.g. US, EU)
In the U.S., for example, the Inflation Reduction Act and related subsidies aim to encourage domestic battery and storage manufacturing. But protectionist rules tied to eligibility for those credits (e.g. foreign entity rules) also add complexity.
Regulatory changes tied to foreign-entity rules
New rules prevent entities with certain foreign ties (e.g., Chinese firms) from accessing incentives, unless they meet strict criteria. That changes supply chain alignment and can exclude some suppliers, even where technical capability exists.
Pros & Cons: Short-Term Price vs Long-Term Stability
Immediate cost hikes, project delays
In the near term, protectionist measures raise costs, add complexity, and may delay projects. Buyers may pay more, developers may delay installation, and innovation (if reliant on imported input) could slow.
Potential gains: resilience, job growth, supply security
In the long run, localising supply chains and reducing dependence on volatile foreign inputs can enhance resilience, create domestic jobs, and reduce risk. Stable supplies and avoided trade shocks may justify the early costs.
What to Watch Through the End of 2025
Trends in battery prices and cell manufacturing capacity
Will domestic manufacturing ramp up fast enough? How much will tariffs raise cost before new local factories lower input costs? Tracking price per kWh, availability of LFP versus other chemistries will be crucial.
Policy pivot points, new trade agreements, material investment
Watch for changes in U.S., EU, China policies-export bans, rebate eligibility, trade deals. Investment in mining, refining, recycling of critical minerals will also shape outcomes.
Conclusion
Protectionism in 2025 is reshaping the industrial battery storage landscape. While costs will rise in the short term due to tariffs, export restrictions, and concentrated materials supply, these same pressures are pushing the industry toward localisation, diversification, new chemistries, and policy innovations. For stakeholders-manufacturers, utilities, governments, and buyers-the key will be managing trade-offs: absorbing near-term cost pain while investing in more resilient, secure, and sustainable supply chains for the future.