Navigating Tariff Threats Under the Trump Administration, Challenges Ahead for the EV and Battery Supply Chain

In general, the imposition of new duties or tariffs typically requires congressional oversight and findings from relevant government agencies, a process that can extend over several months. This includes mechanisms such as the Section 301 tariffs on imports of China-origin products, where tariffs on EVs, battery parts, and critical minerals were recently increased, along with future increases on semiconductors, natural graphite, and permanent magnets that are scheduled for action. Expanding these existing actions would take time for the administration to implement.

However, President-elect Trump may seek to expedite tariff impositions through alternative legal avenues such as the International Emergency Economic Powers Act (IEEPA). While unprecedented, these actions would align with the upcoming administration’s proposals, including potential duty increases on imports from Mexico and Canada, where reports suggest implementation as early as the President-elect’s first day in office.

Such measures could significantly impact the EV supply chain and related industries, necessitating close monitoring of these developments during 2025.

What to Watch in 2025 and Beyond

1. Tariff Increases and Trade Policies: The Trump Administration’s trade policies are expected to focus on increasing tariffs, particularly on imports from China. The continuation or expansion of Section 301 tariffs on EVs, battery parts, and critical minerals could raise costs and disrupt supply chains. The administration may expedite tariff impositions through legal avenues like the IEEPA, potentially impacting imports from a host of US trading partners. Close monitoring of policy developments is the first step. Understanding their transactional impact can mitigate tariff exposure and corporate uncertainty.

2. Global Competitiveness and Supply Chain Dependencies: The administration’s protectionist stance may bolster domestic production but could also increase manufacturing costs and limit vehicle choices. The emphasis on “decoupling” from China suggests a continuation of aggressive tariff strategies, particularly on critical minerals essential for EV batteries. Industry stakeholders seeking to explore a diversified supply chains will need strategic advice prior to launching new production sites or supply partners.

3. USMCA: The United States-Mexico-Canada Agreement (USMCA) is scheduled for a trilateral review and renegotiation during 2026. Key provisions in the pact are particularly important for the EV supply chain into the United States. Some of President-elect Trump’s tariff proposals on Mexico and Canada could be tactics for leverage in the lead-up to these negotiations and provide opportunities for the Trump Administration to negotiate Free Trade Agreements (FTAs) with other countries, potentially affecting the EV and battery supply chain. Industry leaders should take stock of their current use of the USMCA tariff preference opportunities and what potential changes in the minutiae of trade rules could mean for both suppliers and customers. While 2026 is the year of USMCA talks, 2025 will be the year of industry consultations by Ottawa, Washington, and Mexico City.

4. FTAs and Trade Negotiations: The Trump Administration may prioritize renegotiating existing FTAs and pursuing new agreements with countries that align to the administration’s goals for domestic EV and battery production. The direction of such potential FTA developments will likely be impacted by the upcoming USMCA renegotiations. The US-Japan Trade Agreement could also serve as a framework for limited bilateral FTAs with new partners. FTA’s bring tariff preferences but they also require a sophisticated understanding of country-of-origin rules and other trade calculations that are far from intuitive. Stakeholders may wish to seek our advice on particular FTAs with key US trade partners to be best prepared to understand company-specific implications and to work with Washington during the negotiation stages.

5. Legal and Political Challenges in Trade Policy: While the president has some authority to influence trade agreements, unilateral withdrawal from FTAs could face legal and political challenges from Congress. The administration may use national security exceptions to modify duty-free provisions, but such actions would require careful justification. The potential for uncertainty and long-term risk exposure is high for companies involved in the EV manufacturing industry.

How Can We Help?

The incoming Trump Administration’s policies are expected to bring significant changes to the landscape of EVs and related trade issues. While some policy directions are speculative, the administration’s emphasis on trade protectionism and national security could drive stricter regulations and tariff adjustments. We will continue to monitor developments and provide further insights as new and reliable information become available.

Should the possible actions proposed by the upcoming administration be pursued, we are prepared to assist with strategic planning and determining the most effective corporate strategies. Given the uncertain landscape pre-inauguration, at this stage, importing considerations for companies include:

• A fresh review of current US tariff applications and their calculations on imported products and materials into the United States. These are often misunderstood and misapplied by US importers. With these new tariff proposals lurking on the horizon, executives are encouraged to conduct a companywide review of their tariff exposures. Our team assists clients with such project management in an efficient and targeted approach.
• Laying the groundwork for advocacy efforts in anticipation of future tariffs and exclusion processes and be prepared to describe their US corporate presence and economic impact. Our team has worked with a number of key trade associations to best position their members’ interests.
• Review and update sale, supplier, and manufacturing contracts to safeguard against unexpected tariff increases and trade risks for your company’s supply chain. Our interdisciplinary team of attorneys include both trade experts and corporate contact advice.

We have successfully partnered with clients to develop tariff mitigation strategies during the previous Trump Administration and are actively assisting clients in preparation for his upcoming term. This is not new territory for our team and we are ready for Day One.

For further clarification or assistance, please contact our Energy and Cleantech group.