Trump’s new trade tariffs and more import restrictions could drive up costs for US onshore wind power, potentially slowing down the industry’s momentum, according to a new report from Wood Mackenzie.
The report, “Trade war hits US onshore wind power,” warns that Donald Trump’s proposed US tariffs – 25% on imports from Mexico and Canada and 10% on Chinese imports – could raise the cost of wind turbines by 7% and overall project costs by 5%, given the way the US supply chain is currently set up.
“Protectionist policies will push capital costs higher for wind projects,” said Endri Lico, principal analyst at Wood Mackenzie. “In a scenario with universal 25% tariffs on all imported products, the impact would be even greater, with turbine costs potentially rising 10% and overall project costs increasing 7%. This would have material impacts on the industry, putting some projects at risk due to economic factors.”
The US wind industry relies heavily on imports, particularly for components like blades, drivetrains, and electrical systems. In 2023, the US imported $1.7 billion worth of wind-related equipment, with 41% coming from Mexico, Canada, and China.
Lico noted that tariffs aren’t new to the wind sector. “Wind peers await the specialization of the tariff legislation to fully assess the impact. Tariffs imposed during the previous Trump term had minimal impact on the US wind power segment, while a looser monetary policy may soften tariffs’ impact.”
The report predicts that these tariffs could increase the levelized cost of energy (LCOE) for US onshore wind by 4% in the near term. In a scenario where all imports face a 25% tariff, LCOE could jump by 7%. That, in turn, would make one of the cheapest forms of energy more expensive, with the result of raising consumers’ electricity bills.
“The supply chain actors are waiting for the dust to settle, exploring their options,” added Lico. “We anticipate that wind manufacturers will adopt a mix of measures to mitigate tariffs’ impact, including rerouting and restructuring their supply chains and assembly lines, strengthening US localization, and increasing their prices.”
Read more: Renewables provided 90% of new US capacity in 2024 – FERC
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