The escalating trade war between the United States and China is reshaping the global energy transition. As the two largest economies exchange restrictions and tariffs, the impact on clean energy technologies—especially those reliant on critical minerals and international supply chains—is becoming increasingly apparent.
These geopolitical tensions could stall renewable energy adoption or accelerate innovations and diversification strategies to reduce dependence on China’s dominance.
China’s Critical Minerals Ban: A Strategic Signal
In December 2024, China escalated tensions by banning exports of key minerals to the United States. The targeted minerals—essential for technologies in semiconductors, defense, and renewable energy—are gallium, germanium, antimony, and graphite.
This marks a new phase in the trade war, with China signaling its readiness to leverage its dominance in these materials as a geopolitical tool.
Combs and Trivium China co-founder Andrew Polk noted that those restrictions suggest that the largest Asian economy is “ready to counter the US moves much more aggressively”.
While the immediate effects are muted, given prior restrictions on these minerals, the potential for broader economic pain looms large. For example, graphite, a vital material for lithium-ion battery anodes, is critical for electric vehicle manufacturing and grid storage systems.
- China controls 80% of global graphite output and processes 70% of it, making its dominance a significant bottleneck in the clean energy supply chain.
Here are the other critical minerals that China has a substantial grip on as per the Grantham Research Institute on Climate Change and the Environment analysis:
As seen above, China also controls over half of the global processing capacity for aluminum, indium, lithium, silicon, and rare earth elements (REEs), while also leading in REE extraction.
So, how can this control impact the most needed transition to clean energy, particularly for the U.S.?
Rising Costs for Key Technologies:
The price of EV batteries, solar panels, and other clean technologies could rise as supply chain disruptions drive costs. Batteries, which already represent a significant portion of an EV’s cost, require vast quantities of graphite.
Any further restrictions could exacerbate pricing pressures, slowing consumer adoption of EVs and renewable energy solutions. EVs’ high price tags are one of the biggest hurdles for buyers.
Diversification Challenges:
While the U.S. and its allies are pursuing alternatives, building domestic supply chains or sourcing from other nations takes time. Recent investments include a $150 million loan to accelerate graphite mining in Mozambique and a proposal to reopen a gold mine in Idaho to extract antimony for military applications.
These efforts, while promising, are years away from meeting current demand. For instance, the proposed reopening of the Yellow Pine mine in Idaho could bolster domestic antimony supply, but full-scale operations are unlikely before 2027.
Economic Ripple Effects:
A U.S. Geological Survey found that a complete ban on gallium and germanium exports could reduce U.S. GDP by $3.4 billion. While niche applications dominate these materials, their use in semiconductors, LEDs, and military components underscores their strategic importance.
U.S. Strikes Back: Tariffs and Supply Chain Resilience
President Donald Trump’s administration has pledged to impose steep tariffs on Chinese imports, ranging from 10% to potentially 100%. These measures aim to curb dependence on Chinese goods but risk further inflating costs for clean energy technologies.
Efforts to counter China’s influence include bolstering domestic production and securing new trade agreements. However, the U.S. relies heavily on Chinese manufacturing for components like solar panels and wind turbine parts. This highlights the challenges of quickly achieving supply chain independence.
Global Ripple Effects: Beyond the US and China
The trade war is not only impacting U.S.-China relations; it is reverberating across the globe.
Europe, Japan, and other nations reliant on Chinese-made clean energy components face similar vulnerabilities. For instance, Europe has ambitious offshore wind targets but remains dependent on Chinese supply chains for cost-effective production.
China’s dominance in solar panel and wind turbine manufacturing gives it leverage over global renewable energy development. However, disruptions in its supply chain could also hurt its economy, as nations shift toward alternative suppliers and technologies.
China’s Paradox: Leading with a Dominant Grip on Supply Chains
China’s position in the clean energy sector is paradoxical. On one hand, it dominates the production of critical materials and components. On the other, it is also a leader in renewable energy deployment, accounting for more than half of global offshore wind installations in 2023.
- China also produced over 80% of the world’s solar panel supply in 2023, making any disruption in trade a significant challenge for global renewable energy targets.
This dual role creates mutual dependencies. While China can disrupt global supply chains, its economy benefits from being the world’s primary supplier of clean energy components. This tension underscores the complexity of the trade war’s impact on both nations.
The US-China trade war, while disruptive, presents opportunities to accelerate innovation and diversification in the energy sector. Here’s how:
- Innovation in Battery Materials:
Researchers are exploring alternative chemistries that reduce reliance on graphite and other materials dominated by China. Advancements in solid-state batteries and recycling technologies could lessen dependence on traditional supply chains. - Strengthening Domestic Supply Chains:
The U.S. and its allies are increasing investments in mining and processing critical materials domestically or through friendly nations. Check out how this energy metals company is doing just that, strengthening U.S. energy independence. Moreover, diversifying supply sources not only reduces reliance on China but also enhances energy security.
The Bigger Picture: Trade Wars and Climate Goals
Global clean energy goals depend on the rapid deployment of renewable technologies. The International Renewable Energy Agency (IRENA) estimates that renewable energy capacity must triple by 2030 to meet climate targets.
Trade wars and supply chain disruptions threaten to derail these efforts, particularly in regions heavily dependent on Chinese imports. Even more solar and wind energy together take up over 80% (8,991 GW) of the 2030 renewable tripling pledge.
At the same time, the conflict could drive nations to prioritize long-term energy independence and sustainability. Balancing these competing dynamics will require strategic planning, investment, and international cooperation. The stakes are high—not just for the U.S. and China but for the entire planet.
The US-China trade war highlights the delicate balance between geopolitical rivalry and global cooperation in the clean energy transition. It serves as a stark reminder of the interconnectedness of global supply chains and the need for collective action to secure a sustainable future.
