President Trump has announced his “Liberation Day” imposing reciprocal tariffs on some of the US’ largest trading partners, as well as a universal 10% levy on almost all imports. This marks one of the biggest shake ups in global trade in the last 100 years.  

What do the tariffs cover?

Aside from the universal 10%, the Trump Administration has named 60 countries each with a specific reciprocal tariff rate. The 10% universal import is set to be implemented on the 5th of April, while the reciprocal tariffs will start on the 9th of April. 

List of reciprocal tariffs on key economies

  • China – 34%
  • European Union – 20%
  • Japan – 24%
  • South Korea – 25%
  • India – 26%
  • UK – 10%

There are a few notable exemptions to the tariffs, these include steel and aluminium as well as automobiles and auto parts which each have their own 25% tariff. The automobile tariffs are set to take effect on the 3rd of April and are expected to have a significant impact on the EV industry, given that the US imported nearly 40% of all its EVs in 2024. 

Additionally, USMCA qualifying goods from Mexico and Canada will remain exempt from tariffs, while non-qualifying goods will pay the previously announced rate of 25%. Notably, within this energy-related goods imports from Canada, including critical minerals, that are non-USCMA compliant face a lower 10% tariff.

The BESS market in the US is set to be most affected

With EVs not set to be affected by the reciprocal and universal tariffs, the focus turns to the second largest battery demand market in the US, energy storage. In 2024, over 90% of lithium-ion energy storage cells deployed in the US storage market originated from China, according to Rho Motion’s BESS database.

Under the new “reciprocal” tariffs, Chinese goods will face a 34% rate in addition to the previously announced 20% tariffs, the 7.5% already applied to Chinese LFP cells for ESS and the 3.4% baseline tariffs. As a result, Chinese LFP cells will now be subject to a 64.9% tariff, which will increase to 82.4% in 2026 under previously planned Section 301 tariff increases announced under the Biden Administration. 

Assuming the IRA production credit remains in place, this has the potential to dramatically bolster the cost competitiveness of domestically produced cells compared to Chinese counterparts. However, with domestic LFP supply still constrained, many industry players will remain dependent on Chinese-made cells, pushing cell prices back up to levels last seen in 2022. While this will undoubtedly drive up costs, the BESS market is still expected to grow with the potential for Chinese players to absorb some or part of the tariff due to the higher levels of margins currently achieved.

Do the tariffs cover critical minerals?

The White House confirmed that ‘certain’ minerals, including copper, would be exempt from reciprocal tariffs due to US dependencies on foreign supply across key strategic industries and technologies.

In 2024, the US was 100% dependent on imports to meet its demand for natural graphite and high-purity manganese sulphate, while domestic supply of lithium, cobalt, and synthetic graphite was equivalent to less than 10% of demand, according to Benchmark analysis. 

List of key mineral exemptions:

  • Copper 
  • Cobalt 
  • Lithium
  • Manganese 
  • Fluorspar
  • Natural Graphite
  • Silicon
  • Rare Earths
  • Pet coke (calcined/non-calcined)

The US has a significant copper pipeline supply, with close to 2 million tonnes of pipeline supply identified by Benchmark across 31 projects, potentially making the US a top 3 producer globally if realised. 

To incentivise domestic production, President Trump has indicated he plans to levy a separate tariff on copper imports, the result of a Section 232 investigation initiated on copper imports on national security grounds earlier this year. Although unspecified, market expectations are for a 25% tariff, similar to those imposed on steel and aluminium. Tariffs are just one of the measures that the US could adopt as a result of the Section 232 investigation, which include the export controls (to deter copper scrap exports).

Although exempt from yesterday’s tariff announcement, reports indicate that President Trump is considering launching a tariff investigation on critical minerals under Section 232 of the Trade Expansion Act – raising the prospect for future levies on these minerals.

The effect on battery recyclers depends on the future macro economic environment 

In the short term, impacts on the battery recycling industry will remain limited considering the critical minerals exemptions. However, in the longer term, broader macroeconomic effects could drive up overall operating costs for recyclers, while the supply of end-of-life batteries may fall short of initial expectations due to weakened consumer demand.

What will the macro-economic impact be?

In the short term, these tariffs are likely to fuel inflation, driving up prices and dampening consumer spending. Over time, inflationary pressures may intensify as the costs of supply chain restructuring are transferred to consumers and domestic producers seize the opportunity to raise prices. However, a contraction in demand could simultaneously weaken economic growth, heightening the risk of stagflation. While the ultimate impact of these measures remains uncertain, what is clear is that the implementation of many of these tariffs will be complex and will involve numerous legal issues.

More Information

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