In recent weeks, the Trump administration has launched a dramatic – and dizzying – round of new tariffs on imports from countries across the world. The rollout has been chaotic. Announcements have been made, rescinded, delayed, reannounced and reshuffled in breakneck fashion, leaving companies and policy makers scrambling to figure out what’s going into effect.
As of this writing, the Trump administration has announced or implemented an array of tariffs on imports from various countries, including:
- A 25% additional tariff on most goods imported from Canada or Mexico; automobiles and goods covered by the US-Mexico-Canada Agreement (USMCA) are thus far exempt from these tariffs.
- A 145% tariff on goods imported from China.
- A 10% additional tariff on all imports.
- A 25% additional tariff on all steel and aluminum imported into the US.
It’s been hard enough to track what’s happening day to day, let alone forecast the economic fallout. Given the significant global and material supply chain requirements in the renewable energy industry, both the tariffs themselves and their haphazard implementation raise uncertainty for the clean energy economy. How might they affect clean energy projects and climate jobs in Illinois and beyond? And can we even begin to predict their impact when there is so much uncertainty and volatility?
What has changed, and what has stayed the same
Industries reliant on Chinese imports, particularly the electric vehicle and renewable energy sectors, were already subject to some tariffs under former president Joe Biden. In May 2024, the Biden administration placed a slew of tariffs on imported Chinese goods, including 25% on steel and aluminum, 50% on semiconductors, 25% on batteries and some battery components, and 50% on solar cells. The Biden administration also placed a 100% tariff on imported Chinese electric vehicles, essentially precluding the possibility of Chinese EVs being sold in the United States.
It is important to note, however, that the Biden administration coupled these tariffs with significant Inflation Reduction Act incentives for solar and wind development, as well as incentives for EV supply chain onshoring.
That balance could be disrupted.
Should the Trump administration revoke these incentives, the economics of renewable energy and electric vehicle development will suffer, tipping the scale against clean energy. Even as these incentives continue to exist (for now), the threat of tariffs and anti-renewable-energy policies from the Trump administration has spooked clean energy investors, threatening clean energy projects and the jobs that come with them. And although the ostensible purpose of the tariffs is to bring manufacturing jobs to the United States, it’s very unlikely that they will do so: in fact, the tariffs have increased trepidation among some clean energy manufacturers.
Additionally, there is a considerable lack of clarity regarding what products are affected or exempted from the tariffs on Chinese imports. It appears that solar panel frames will be exempted, but other Chinese solar components could still be subject to tariffs, which threatens to raise the cost of solar development and slow job creation in the industry.
The additional tariffs on Canadian and Mexican imports could also have significant impacts: much of the steel used for wind turbines is imported from Canada and Mexico, and some analysts have projected that increased tariffs could raise the cost of a wind turbine by as much as 10%.
Additionally, General Motors and Ford (among other manufacturers) produce some electric vehicles in Mexico, and if the automotive industry exception to the tariffs is lifted, this could cause price increases for those vehicles.
This collective ambiguity creates significant uncertainty for American clean energy manufacturers and the employees that work for them.
What it means for Illinois
For Illinois, the stakes are particularly high, as the state has invested significantly in the clean energy transition.
The effects of the Trump administration tariffs on the clean energy industry and workforce in Illinois are difficult to project with any degree of certainty. However, there are several areas of concern that advocates, policymakers, and labor unions must monitor.
First, Illinois’ electric vehicle manufacturing sector, which already faced an uncertain future, faces more significant potential obstacles in the form of increased battery costs. It’s possible that battery materials tariffs could slow job growth at the Rivian manufacturing facility in Normal or the Gotion battery factory in Manteno. The tariffs could also further delay the reopening of the Stellantis plant in Belvidere as an electric vehicle facility: a yet-unfulfilled promise that was a major point of contention during the 2023 United Autoworkers strike, and stands to affect hundreds of union jobs in northern Illinois.
Additionally, increases in the price of renewable energy due to tariffs could threaten Illinois’ progress toward its renewable energy goals.
The State of Illinois, through the Illinois Power Agency, conducts competitive procurements for utility-scale wind and solar projects to obtain Renewable Energy Credits that count toward the state’s Renewable Portfolio Standard. The IPA’s procurement budget is funded by money allocated from Illinois ratepayers. However, if tariffs raise the price of implementing wind and solar projects, this could generate budget shortfalls that require either procuring less renewable energy (and therefore generating fewer jobs in solar and wind) or charging Illinois ratepayers more: both suboptimal outcomes.
Additionally, increased solar and wind project costs due to tariffs could also slow the community and residential solar markets, further limiting clean energy jobs and climate progress in the state.
The Bigger Picture
Amid the myriad potential effects of the Trump administration’s tariffs, perhaps the greatest could be the sheer instability their announcement and implementation has generated in the global economy.
On April 2nd, when President Trump announced the expanded wave of tariffs, global markets crashed in historic fashion with the Dow, S&P 500, and Nasdaq posting their greatest single-day losses since 2020. Although markets have shown signs of recovery since the President walked back many of his tariff announcements, significant uncertainty around the Trump administration’s tariff policy, as well as potential retaliatory tariffs enacted by other nations, remains.
Ultimately, the administration’s tariff policy could result in a global economic recession, which would have severe consequences for job creation and economic well-being, particularly given the construction industry’s vulnerability to economic recessions.
Conclusion
Illinois has made strides in the clean energy transition, but tariffs, trade wars and whiplash policy reversals could slow that progress. It’s still early days, and it is difficult to predict how all of these policy decisions will manifest in Illinois.
What we do know is that with the interconnectedness of the global supply chain, trade policy is climate policy. And these tariffs and Trump’s policy overall portend future challenges for the clean energy supply chain and workforce.