White House has signed a new trade agreement with China. Now tariffs have decreased from 15% to 7.5%. The deal concerns the import of batteries.
This agreement includes a series of contracts worth $300 billion. These exemptions will allow access to cheaper equipment for the storage and production of energy. Chinese manufacturers have more favorable prices for products, which will stimulate the industry as a whole. But the energy storage marketplace is still undergoing a phase of government intervention. It harms the tempo of economic development. Be that as it may, further trade negotiations are still underway.
According to Kelly Speakes-Backman, CEO of the Energy Storage Association, this is a step in the right direction. Nevertheless, she believes that batteries are not number one in the list of imported goods.
Previously, the leading suppliers of lithium-ion batteries were Japan and South Korea. Unfortunately, these countries have reduced the number of imported products. As a result, the United States began to work with China to fill the electronics gap. Local production has made a significant technological leap over the past five years. As a result, their batteries are suitable for electric vehicles, power plants, and other needs.
As of early 2020, 40% of all lithium-ion battery projects are based on Chinese imports. Recall that in August last year there was a tariff increase of 10%. Soon, the rate was raised to 15% by decree of the President.
As a result of the tariff increase, the whole industry experienced negative consequences. The decision became a real contradiction and caused dissonance in the economy. At the moment, the government aims to create Energy storage. This project is part of the “Grand Challenge” energy storage supported by the Department of Energy. The project should be implemented by 2030.
Battery capacity currently depends on imports. The only exception is the Tesla and Panasonic project. The DOE intends to stimulate national manufacturers to increase the share of American solar products in this market. But supporting domestic producers is not the primary goal of the government. It is only part of the plans for a trade war with China. These events can be seen as an attempt to obtain several concessions from importers.
It is only the first stage of change that will affect all market participants. The second phase is planned after the 2020 election. Then we will see changes in trade policy. Importers should adjust further purchases and hope for new positive changes in legislative initiatives.