Trump’s Trade and Tax Policies Start to Stall U.S. Battery Boom

Battery manufacturing began to take off in the United States in recent years after Congress and the Biden administration offered the industry generous incentives.

But that boom now appears to be stalling as the Trump administration and Republican lawmakers try to restrict China’s access to the American market.

From South Carolina to Washington State, companies are slowing construction or reconsidering big investments in factories for producing rechargeable batteries and the ingredients needed to make them.

A big reason is that higher trade barriers between the United States and China are fracturing relationships between suppliers and customers in the two countries. At the same time, Republicans are seeking to block battery makers with ties to China, as well as those that rely on any Chinese technology or materials, from taking advantage of federal tax credits. The industry is also dealing with a softening market for electric vehicles, which Republicans and Mr. Trump have targeted.

The China-related restrictions — included in the version of Mr. Trump’s domestic policy bill passed by the House — would be very difficult for many companies to operate under. China is the world’s top battery manufacturer and makes nearly all of certain components.

The Trump policy bill highlights a difficult dilemma. The United States wants to create a homegrown battery industry and greatly reduce its dependence on China — and many Republican lawmakers want to end it altogether. But China is already so dominant in this industry that it will be incredibly hard for the United States to become a meaningful player without working with Chinese companies.