Trump’s Tariffs Are An Economic & Environmental Boomerang

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Last Updated on: 7th March 2025, 03:07 pm

The first Trump trade war was a disaster for US cleantech, and it looks like 2025 is setting up to be an encore performance. Between 2018 and 2020, Trump’s tariffs on solar panels cost the US an estimated 10.5 GW of lost solar capacity, delaying the transition to clean energy and locking in millions of tons of unnecessary CO₂ emissions. Now, with the second Trump administration’s on again, off again, put and take tariffs mostly penalizing Mexico and Canada, but also targeting China, the writing is on the wall.

This isn’t just a repeat of the same mistakes. It’s an escalation. And the consequences for clean technology, industrial emissions, and global climate efforts could be catastrophic.

We’ve been here before. The Trump Administration’s first round of tariffs in 2018 slapped duties on steel, aluminum, solar panels, and a long list of Chinese imports. The logic? Protect US industry and jobs. The reality? It raised costs for US manufacturers, slowed clean energy deployment, and did nothing to cut global emissions.

Fast forward to 2025, and the stakes are even higher. Cleantech is no longer emerging — it’s dominant. Solar and wind are now the cheapest sources of new electricity in most of the world. EVs are outselling internal combustion vehicles in some markets. Batteries are at the heart of the grid’s transition to reliability without fossil fuels. Any disruption to these sectors isn’t just a speed bump — it’s a wrecking ball.

Let’s look at the likely impact across major industries.

Trump’s last round of solar tariffs jacked up US panel prices by 30% at a time when global solar costs were plummeting. The result? A major slowdown in utility-scale solar projects. An estimated 62,000 US solar jobs were lost or never created as a result. Expect even worse in 2025.

The Biden Administration’s Inflation Reduction Act (IRA) is fueling a surge in US solar manufacturing, but the industry still relies on a global supply chain for polysilicon, wafers, inverters, and balance-of-system components. A blanket tariff on imports will choke supply, drive up costs, and slow deployments.

Wind power isn’t safe either. 75% of a wind turbine’s mass is steel. In 2018, Trump’s steel tariffs increased the cost of US wind projects, cutting into already thin margins. A new round of tariffs on imported steel from Mexico or Canada, where many turbine towers and components are sourced, would mean higher costs, fewer projects, and continued reliance on fossil fuels.

The US EV market is finally taking off, with Tesla, Ford, and GM all scaling up electric vehicle production. But it still depends on critical battery minerals from Canada, nickel from Indonesia, and lithium-ion cells from Asian manufacturers. Broad tariffs on these inputs will act as a direct tax on EV production, making electric cars more expensive and slowing adoption.

Meanwhile, China is flooding global markets with cheap EVs. If Trump blocks those imports outright, American automakers will face higher costs while missing out on the intense global competition that drives innovation. A tariff on Chinese batteries will ripple through the entire supply chain, hitting American consumers with higher EV sticker prices while ensuring that internal combustion vehicles remain more attractive for longer.

More expensive EVs mean more gasoline demand. And that means more oil burned. The math isn’t complicated.

If Trump’s tariffs were structured as carbon-based tariffs, targeting high-emissions production, they might have some climate benefits. But they aren’t. They’re protectionist, not climate-driven.

Take aluminum. Canadian aluminum — responsible for a huge share of US imports — is produced with hydropower and has one of the lowest CO₂ footprints in the world. Chinese aluminum, by contrast, is powered by coal, making it about 2.5 times more carbon-intensive. Tariffing Canadian aluminum with higher tariffs than Chinese aluminum would increase the carbon intensity of the US aluminum supply, not decrease it, as would shifting aluminum smelting to the United States. There’s a reason North America’s aluminum comes from Canada: cheap electricity that is incidentally very low carbon.

The same logic applies to steel. US electric arc furnace (EAF) steelmaking is among the cleanest in the world. But Trump’s last tariffs didn’t slow dirty production abroad — they just rearranged supply chains. China and other major steel exporters ramped up sales to markets outside the US, keeping emissions just as high while making American manufacturers pay more for raw materials. This may be mitigated by China’s pivot to EAF and stopping of permitting of coal-fired blast furnaces, or it may not.

A new round of Trump tariffs won’t just hurt the US — it’ll set off a chain reaction of retaliatory trade measures that will make cutting global emissions even harder.

China’s response to tariffs in 2018 was clear: instead of scaling back production, it loosened environmental enforcement to protect domestic industries, leading to increased coal consumption and record steel output. The result? Higher emissions, not lower. As Trump unleashes another round of protectionist measures in 2025, China will likely double down on its strategy, ensuring that any emissions reductions in the US are offset by dirtier industrial activity elsewhere.

Meanwhile, the European Union is rolling out its Carbon Border Adjustment Mechanism (CBAM), a policy designed to tax imports based on their carbon footprint. As the US launches a trade war without aligning its policies to favor low-carbon production, Europe’s CBAM will effectively block high-emissions American exports, escalating tensions between the world’s largest economies. Instead of cooperation on clean technology and industrial decarbonization, we are likely to see a tit-for-tat tariff fight that fractures global climate efforts.

Canada and Mexico won’t sit still either. Both were hit hard by Trump’s steel and aluminum tariffs in 2018 and responded with counter-tariffs on American exports. Another round of tariffs in 2025 that actually stick would wreak havoc on North American supply chains for critical minerals, EV batteries, and renewable energy components. At a time when the US, Canada, and Mexico should be working together to build an integrated clean tech manufacturing powerhouse, Trump’s policies would drive them apart — raising costs, slowing investment, and making it harder for North America to compete with China and the EU in the industries of the future. Canadian Prime Minister Justin Trudeau criticized Donald Trump’s tariffs as “insulting and unacceptable,” calling them a “dumb move” that would ultimately hurt both American and Canadian workers. He’s right, Trump is wrong.

Tariffs are not climate policy. Trump’s planned 2025 tariffs will do the exact opposite of what’s needed to cut emissions. They will drive up clean energy costs, delay decarbonization, and trigger a wave of emissions-intensive industrial shifts worldwide. If Trump wanted to protect American industry while lowering emissions, he’d back carbon tariffs that reward low-carbon producers and penalize high-emissions imports. But that’s not on the agenda. Instead, we’re looking at the same economically and environmentally disastrous trade policies from his first term — just bigger and dumber.

The only thing tariffs are guaranteed to accomplish? More pollution, higher consumer costs, and lost time in the race to decarbonization. And time is the one thing we don’t have.