Impact of US Tariffs 2025 – Energy & Power Sector

The research includes primary activities to determine existing and future effects of US tariffs - 2025 on the energy & power sector. Secondary research sessions analyzed tariff policies while collecting trade flows and import-export dynamics data for all energy components within oil & gas, power infrastructure, and renewable energy equipment. Scientific review of industry reports, trade database analysis, and government announcements revealed historical and present policy developments.

Secondary Research

The research into energy & power industry tariff effects drew from secondary sources combined with trade data repositories alongside regulatory directories, including the World Trade Organization (WTO), Office of the United States Trade Representative (USTR), and International Energy Agency (IEA) as well as World Bank's Global Trade Analysis Project (GTAP). The research used secondary resources that provided information about the technical, economic, and policy dimensions associated with how international trade tariffs affect energy infrastructure growth and market conditions.

Primary Research

The energy & power industry affected by tariffs comprises manufacturers of power equipment, component suppliers, utility providers, and developers of energy infrastructure and trade policy regulators who operate through various stages of a global supply chain. Implementing trade barriers on key equipment such as transformers, switchgear, solar inverters, and smart meters generates increasing costs throughout the entire power industry at supply and end-user levels, mostly in markets that rely significantly on imported infrastructure materials.

Study Overview: US Tariff Impact on the Energy & Power Industry  Regional Analysis

North America

The 2025 US tariff expansion has caused a significant impact on the entire North American energy & power sector, especially concerning clean energy supply chains. These tariffs boost artificial prices for solar modules, wind turbines, transformers, etc., and all battery-related components, aiming to down reliance on foreign manufacturing imports. Although aimed at increasing domestic production, the existing manufacturing capacity in the US is far lower than what is required, thus causing delays and further inflated costs for utility-scale developments. Effects are being felt even within regional trade as punitive duties are currently levied on Canadian and Mexican exporters due to tightened domestic content and origin requirements from the US Measures further complicate cross-border energy cooperation, cause logistical bottlenecks and regulatory uncertainty, and increase compliance costs by many companies operating across North America. Most importantly, the clean energy sector is experiencing shortages and escalating prices for components. This has slowed grid modernization efforts, increased procurement risks posed to utilities, and brought uncertainty to investors evaluating long-term clean energy projects.

Europe

The recent US tariffs on European Union goods jeopardized established supply chains but added another layer of complexity to the geopolitical landscape between the US and Europe. Apart from these tariffs, these continue to extend beyond trade tensions between the two regions and will definitely cause major repercussions on how the EU energy sphere will carry on with its significant green energy transition. The EU has been reducing its dependence on fossil fuels and moving increasingly towards renewable energy because of the European Green Deal. The tariffs will slow renewal, making wind turbines, solar panels, and battery storage technologies for renewable energy systems more expensive. Additionally, restricting material flows into the EU will only hurt the green imaginations of the region and could ultimately lessen their global competitiveness in the energy market as it concerns the high capacity production of Chinese actors, which is then untainted by such tariff barriers.

Finally, the impact of this move on energy storage systems, which are needed to achieve a balance with intermittent renewable energy generation, may worsen the implications that Europe will have to withstand in its quest to reduce greenhouse gas emissions and achieve its climate objectives. Expensive and complicated to procure energy storage solutions may delay the deployment of the infrastructure needed within the EU to enable a cleaner, more sustainable energy system.

The strategic policy responses that the European Commission is presently contemplating are tariff retaliation, trade agreements, and investments in domestic manufacturing capabilities for key energy components. The measures being implemented will ensure that the EU remains competitive in the global energy market while doing its best to minimize the detrimental impact of US tariffs. As the global energy transition picks up speed, it is important for Europe to thread the needle with utmost dexterity against these geopolitical tensions. Overcoming the challenge posed by tariffs will be achieved through diplomacy, strategic investments, and continuous dialogue within the EU to ensure that the bloc advances toward a sustainable energy future.

Asia Pacific

The energy & power sector in Asia Pacific has been significantly impacted by the 2025 US tariffs, setting off a ripple effect that deepened geopolitical tensions and economic uncertainty, compelling regional players to reevaluate their investment strategies in the energy transition. The emphasis has been on localizing clean energy supply chains, especially solar PV, inverters, and battery storage systems; however, many economies are experiencing disruptive effects from global trade volatility, capital flow, and changing procurement dynamics. Southeast Asia, in particular, has emerged as a key node in the global clean energy value chain, serving as a manufacturing hub for solar panels, energy storage modules, and other critical components.

The increase in operational costs for companies either exporting to the US or being heavily reliant on US capital goods and technologies can directly be linked to US tariffs. Several manufacturers are reassessing where and how they deploy production assets, with some looking to bypass US-linked routes altogether. The changes in such geographies are already feeding back into investment decision-making in the ASEAN markets, where businesses are seeking to hedge against escalating trade risks by strengthening intra-Asia partnerships and regional financing mechanisms.

There is also keen competition among US suppliers and Asian buyers regarding entering long-term contracts for LNG and clean energy. However, Japan and South Korea are shifting their energy import procurement timelines to hedge new cost layers imposed by the tariffs. Similarly, India and Vietnam are now redoubling efforts toward the production of domestic energy supply technologies because of heightened global uncertainty and the required continuity in their ambitious electrification and decarbonization plans. Its indirect repercussions are already coming to light. Investor market sentiment in Asia Pacific has turned more cautious regarding clean energy projects, particularly those based on international supply chains or exposure to components sourced from the US. The effect is most likely to come in the long term and will be reflected in slow changes in supply chain architecture, project risk evaluations, and geographic rebalancing in clean energy investments.

South America

South America's energy & power sectors have been deeply affected by the 2025 US tariff expansion, which has triggered significant disruptions, strained trade relationships, and introduced new challenges for renewable energy development across the region.

In spite of being aimed at reducing the dependence of the US on foreign manufacturing, the tariffs have unwittingly raised the prices of essential components such as solar modules, wind turbines, transformers, and parts for batteries. South America does not have the required local manufacturing capabilities, which causes delays and escalates quantities in utility-scale developments. Because of the stringent requirements regarding US content and origin, exporters from neighboring countries such as Brazil, Argentina, and Chile are now subjected to punitive duties. Such a regulatory environment has strained cross-border energy business partnerships and aggravated logistical bottlenecks, further adding to the compliance costs of companies operating in South America.

The renewable energy sector was particularly stressed under these measures, suffering from shortages of critical components and increasing risk for procurement activities. This environment has slowed grid modernization, increased uncertainty for utilities, and inhibited long-term investments in clean energy projects. Altogether, the 2025 tariffs initiated a new set of uncertainty and challenges for South America's energy & power sectors, illustrating the difficulties of harmonizing domestic manufacturing aspirations with regional and international trade considerations.

Middle East & Africa

The 2025 US tariff caused massive disruptions to energy and infrastructural supply chains throughout the Middle East & Africa (MEA) region. The costs of importing technologies manufactured or sourced from the US weigh heavily on the nation due to steep duties imposed on major energy components such as solar panels, wind turbine parts, transformers, and battery storage systems. Many countries in the MEA region that rely on American technologies for renewable energy development and power grid upgrades have significantly been affected. Despite the region's efforts to diversify its sourcing through Asian and European suppliers, this sudden change has led to procurement delays, heightened project costs, and a lack of certainty in long-term energy planning. Challenges have arisen in meeting their stated infrastructure schedules and climate objectives in countries such as the UAE, Saudi Arabia, and South Africa, which are making major investments in clean energy transitions.

US contractors in the region are facing strains on joint ventures and supply chain disruptions, taking the competitive edge out of large-scale tenders. Convoluted the MEA energy picture further, as these tariffs have forced decision-makers to rethink import-dependent strategies and fast-track the local manufacture of energy technology assets.

Key Stakeholders

• Energy utilities
• Power service providers
• Solution vendors
• Original equipment manufacturers (OEMs)
• Government agencies
• Managed service providers (MSPs)
• System integrators
• Consultancy firms/advisory firms
• Investors and venture capitalists
• Independent software vendors
• Value-added resellers (VARs) and distributors
• Governments and urban planning agencies

Report Objectives

• To define, describe, and assess the impact of US 2025 tariffs on the energy & power industry across different regions
• To estimate the economic and operational impact of tariffs across five key regions: North America, South America, Europe, Asia Pacific, and Middle East & Africa, including their key countries
• To strategically evaluate the effects of tariffs on subsegments such as power generation equipment, transmission and distribution infrastructure, and renewable energy components