Will global climate action be a casualty of Trump’s tariffs?

Will global climate action be a casualty of Trump’s tariffs?

Donald Trump’s upending of the global economy has raised fears that climate action could emerge as a casualty of the trade war.

In the week that has followed “liberation day”, economic experts have warned that the swathe of tariffs could trigger a global economic recession, with far-reaching consequences for investors – including those behind the green energy projects needed to meet climate goals.


Fears of a prolonged global recession have also tanked oil and gas prices, making it cheaper to pollute and more difficult to justify investment in clean alternatives such as electric vehicles and low-carbon heating to financially hard-hit households.

But chief among the concerns is Trump’s decision to level his most aggressive trade tariffs against China – the world’s largest manufacturer of clean energy technologies – which threatens to throttle green investment in the US, the world’s second-largest carbon-emitter.
‘A tragedy for the US’

The US is expected to lag farther behind the rest of the world in developing clean power technologies by cutting off its access to cheap, clean energy tech developed in China. This is a fresh blow to green energy developers in the US, still reeling from the Trump administration’s vow to roll back the Biden era’s green incentives.

Leslie Abrahams, a deputy director at the Center for Strategic and International Studies (CSIS) in Washington DC, said the tariffs would probably hinder the rollout of clean energy in the US and push the country to the margins of the global market.




Specifically, they are expected to drive up the price of developing clean power, because to date the US has been heavily reliant on importing clean power technologies. “And not just imports of the final goods. Even the manufacturing that we do in the United States relies on imported components,” she said.

The US government’s goal to develop its manufacturing base by opening new factories could make these components available domestically, but it is likely to take time. It will also come at considerable cost, because the materials typically imported to build these factories – cement, steel, aluminium – will be subject to tariffs too, Abrahams said.

“At the same time there are broader, global economic implications that might make it difficult to access inexpensive capital to build,” she added. Investors who had previously shown an interest in the US under the green-friendly Biden administration are likely to balk at the aggressively anti-green messages from the White House.

Abrahams said this would mean a weaker appetite for investment in rolling out green projects across the US, and in the research and development of early-stage clean technologies of the future. This is likely to have long-term implications for the US position in the global green energy market, meaning it will “cede some of our potential market share abroad”, Abrahams added.

Instead, countries like China are likely to divert sales of their clean energy tech away from the US to other countries eager to develop green energy, Abrahams said. “So on the one hand, that should help to accelerate adoption of clean energy in those countries, which is good for emissions, but for the US, that is future market share that we’re ceding,” she said.
‘Clean energy is unstoppable, with or without Trump’

It’s important to distinguish between the US and the rest of the world, according to Kingsmill Bond, a strategist for the energy thinktank Ember.

“The more the US cuts itself off from the rest of the world, the more the rest of the world will get on with things and the US will be left behind. This is a tragedy for the clean energy industry in the US, but for everyone else there are opportunities,” he said.

Analysis by the climate campaign group 350.org has found that despite rising costs and falling green investment in the US, Trump’s trade war will not affect the energy transition and renewables trade globally.

It said the US was already “merely a footnote, not a global player” in the race to end the use of fossil fuels. Only 4% of China’s clean tech exports go to the US, it said, in a trade sector where sales volume grew by about 30% last year.

“Trump’s tariffs won’t slow the global energy transition – they’ll only hurt ordinary people, particularly Americans,” said Andreas Sieber, an associate director at 350.org. “The transition to renewables is unstoppable, with or without him. His latest move does little to impact the booming clean energy market but will isolate the US and drive up costs for American consumers.”
View image in fullscreenPeople work on a production line for wind turbine blades in Jilin province, north-east China. Photograph: Xinhua/Rex/Shutterstock

One senior executive at a big European renewable energy company said developers were likely to press on with existing US projects but in future would probablyinvest in other markets.

“So we won’t be doing less, we’ll just be going somewhere else,” said the executive, who asked not to be named. “There is no shortage of demand for clean energy projects globally, so we’re not scaling back our ambitions. And excluding the US could make stretched supply chains easier to manage.”

Countries likely to benefit from the fresh attention of renewable energy investors include burgeoning markets in south-east Asia, where fossil fuel reliance remains high and demand for energy is rocketing. Australia and Brazil have also emerged as countries that stand to gain.

“In times like these, countries will be increasingly on the hunt for domestic solutions,” Bond said. “And that means clean energy and local supply chains. There are always climate reasons to go green, but there are national security reasons now too.”

The challenge for governments hoping to seize the opportunity provided by the US green retreat will be to assure rattled investors that they offer a safe place to invest in the climate agenda.

Dhara Vyas, the chief executive of Energy UK, the UK industry’s trade body, said: “Certainty has always been the thing that investors say they need. The UK is seen as a stable country with a stable government, but now more than ever we need to double down on giving certainty to investors.”

“Investors do like certainty,” Bond agreed. “But they also like growth and opportunity, so that’s why there is some confidence that they will continue to deploy capital in the sector.”
‘The US still matters’

Although the green investment slowdown may be largely limited to the US, this still poses concerns for global climate progress, according to Marina Domingues, the head of new energies for the consultancy Rystad Energy.

“The US is a huge emitter country. So everything the US does still really matters to the global energy transition and how we account for CO2,” she said. The US is the second most polluting country in the world, behind China, which produces almost three times its carbon emissions. But the US’s green retreat comes at a time when the country was planning to substantially increase its domestic energy demand.

After years of relatively steady energy demand, Rystad predicts a 10% growth in US electricity consumption from a boom in AI datacentres alone. The economy is also likely to require more energy to power an increase in domestic manufacturing as imports from China dwindle.

In the absence of a growing energy industry, this is likely to come from fossil fuels, meaning growing climate emissions. The US is expected to make use of its abundance of shale gas, but it is planning to use more coal in the future too.

In the same week that Trump set out his tariffs, he signed four executive orders aimed at preventing the US from phasing out coal, in what climate campaigners at 350.org described as an “abuse of power”.

Anne Jellema, the group’s executive director, said: “President Trump’s latest attempt to force-feed coal to the US is a dangerous fantasy that endangers our health, our economy and our future.”