(Bloomberg) — Decarbonizing your life will get more expensive as President Donald Trump imposes tariffs on the US’ top trading partners, spiking the cost of home heat pumps, battery storage systems and electric cars, according to economists.
Trump on Tuesday levied 25% tariffs on goods imported from Canada and Mexico, a day after he signed an executive order doubling a tariff on Chinese products to 20%. The administration has said it intends to put a tax on imports from the European Union and collect a 25% tariff on aluminum and steel imports.
“It’s definitely going to slow down the shift to electric vehicles in particular,” said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. “Once you include taxes on Canada and Mexico, you are going to be hard-pressed to find anything that isn’t in some way or another subject to these taxes.”
That’s because in addition to finished goods, the US imports components from those countries to assemble cars and other products domestically. In 2024, for instance, Mexico and Canada were the first and third largest individual exporters of goods to the US, respectively, according to the US Census Bureau. China was the second largest exporter of products to the US last year while the 27-nation EU sold the most goods in the country.
Americans are also likely to pay more as the tariffs make imported components more scarce and US companies seek to match the higher prices their foreign competitors charge to make up for the taxes.
“Any time you’re restricting supply, it’s going to have a distortionary impact on the market beyond just those specifically imported products because as the total supply gets smaller, prices across the board are going to go up,” said Stephen Naimoli, an analyst at Atlas Public Policy, a Washington, DC-based policy and data research firm.
Prices for heat pumps, EVs and home batteries could further rise if the Trump administration succeeds in fulfilling a pledge to end generous incentives and tax credits for low-carbon appliances and cars.
Alix Langone, a senior research analyst at Boston-based EnergySage, which operates an online solar marketplace for consumers, advised homeowners not to wait. “If you are interested in purchasing a battery or going solar, it’s better to do it now,” she said. “There’s much uncertainty right now about tariffs but it’s a safe bet that prices are going up.”
Here’s how tariffs could show up in the price tags of green products.
Heat pumps
If there’s a magic box to decarbonize your home it’s the heat pump. The high-efficiency electric devices can be configured to heat and cool a dwelling, supply hot water and even dry your clothes by extracting warmth from the atmosphere.
Heat pump manufacturing tends to be regional and of the 4.1 million heat pumps for heating and cooling that shipped in the US in 2024, only 382,000 were imported, mainly from China and Mexico, according to data from industry group AHRI and the United Nations.
But some domestically assembled heat pumps rely on imported parts. For instance, China made 95% of the world’s heat pump compressors in 2023 and accounted for half of the global trade in the components, according to a February report from the International Energy Agency. Tariffs on steel and aluminum could also raise the price of heat pumps in the US.
Naimoli said data on imports of specific heat pump components isn’t publicly available so it’s difficult to gauge the price impact of tariffs on finished products. Replacing a fossil fuel furnace with a heat pump can cost anywhere from $10,000 to $30,000 or more, depending on location and the size of the system. A heat pump water heater can run $7,000 or more in places like California and prices for heat pump clothes dryers range from $900 to more than $2,000.
A spokesperson for Rheem Manufacturing Co., a major US heat pump maker, said, it’s too early to gauge the consequences of tariffs for the domestic market. “We are closely monitoring tariff developments and their impact on global trade and our industry,” the company said. Representatives for two other big US heat pump manufacturers, Carrier Global Corp. and Lennox International Inc., said executives weren’t available to comment.
Some of the top heat pump clothes dryers, such as those made by Bosch and Miele, are imported from Europe and could be subject to tariffs if Trump follows through on his threat to the EU.
Solar panels and batteries
Installing solar panels to generate carbon-free electricity and batteries to store that energy makes heat pumps even more climate friendly. Chinese solar panels were already subject to tariffs imposed by former President Joe Biden and Trump during his first administration. On Monday, Trump doubled an existing 10% tax on China imports. US residential solar installations fell 19% in 2024, but that was mainly due to declining state subsidies for homeowners rather than tariffs, according to a January report from BloombergNEF.
Installations of home battery systems, on the other hand, have boomed as California offered new incentives for solar that require energy storage. Battery costs also fell 20% in 2024 from the previous year. China dominates the market for lithium iron phosphate batteries increasingly used in home battery systems and “new US tariffs on battery imports could prevent prices from falling further, slowing market adoption,” the BloombergNEF report noted.
“These tariffs are going to put a lot of cost pressure on the battery market because batteries are already expensive as it is,” said Langone. But she expects demand to remain strong as electricity prices continue to rise along with power outages from climate-driven extreme weather. “Climate change is inescapable.”
Electric vehicles
A new study from automotive consultant Anderson Economic Group estimated tariffs imposed on Canada and Mexico could add as much as $12,000 to the sticker price of electric vehicles. The average cost of an EV sold in January was $55,614, according to Kelley Blue Book.
In November 2024, 35% of EVs imported to the US came from Mexico, according to Bloomberg NEF. General Motors makes three electric SUVs and the Prologue for Honda in Mexico, where the Ford Mustang Mach-E is also assembled. Tariffs on steel and aluminum and automotive components would also add thousands of dollars to the cost of US-made vehicles, the Anderson Economic Group report found.
“It’s going to hit the everyday person pretty hard,” said Atlas Public Policy founder Nick Nigro.
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