Analysis: How Trump tariffs on Chinese, Mexican and Canadian imports could hit US wind
The US president-elect has threatened to impose tariffs of 25% on Mexican and Canadian imports after he is inaugurated on 20 January 2025. He has also threatened to impose an “additional 10% tariff, above any additional tariffs” on Chinese imports.
Shashi Barla, a global wind industry expert, believes these duties could raise domestic wind project prices by 10-12%.
However, Barla noted that the exact increase rate on US projects would depend on the size of the turbine and project.
The two main components imported from Canada and Mexico are blades and towers. Barla said towers will be hardest to source elsewhere because of their bulk and weight and transport cost if imported internationally and because the US manufacturing capacity of towers is already fully subscribed.
“It would certainly be a very big deal,” Barla said of the consequences for the US wind industry of the tariffs. “Not so much Canada, but Mexico for sure. Lots of volume [of wind components] come in from Mexico.”
Tariff threats
On 23 November, president-elect Donald Trump used social media to threaten the broad border levies contingent upon both fentanyl, a synthetic opioid, and undocumented migrants stopping crossing into the US from Mexico and Canada.
It is unclear whether Trump, who takes office on 20 January, will follow through on his threats, or if they are a crude negotiating tactic. During his first term – between 2017 and 2021 – he imposed some tariffs, but he also threatened others that were never implemented.
A frenzy of diplomatic reaction is now underway, involving both Mexico’s president, Claudia Sheinbaum, and Canadian prime minister Justin Trudeau. Trade wars could ensue if Trump proceeds.
Barla noted that wind equipment costs in the US have already risen by 40% in the past two years. This has been a major factor in projects in the US and elsewhere – especially offshore – being cancelled or delayed.
More recently, on 30 November, Trump also threatened a 100% tariff on Brics countries – Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia and the UAE – if they pursue creating a new currency to rival the US dollar. The possibility of a new currency is seen as slim.
Even so, wind equipment is imported to the US both from India and Brazil, as well as from China.
Were a Brics tariff established, along with tariffs on Canada and Mexico products, US wind project costs could rise by 25-30%, said Barla. He added that US developers would see a total increase in costs of $2-2.5 billion for 2025. Beyond that, the costs would rise based on the estimated increase in installations over the next few years, he said.
On the campaign trail earlier this year, Trump even threatened tariffs on the EU because of the trade imbalance.
Mexico and India are among the top four exporters of wind equipment to the US, according to the Lawrence Berkeley Laboratories’ Land-Based Wind Market Report 2024.
The US imported $571 million worth of onshore wind components from Mexico in 2023, $165 million worth from India and $55 million in components from Canada.
In comparison, US onshore wind imports from Germany totalled $245 million, while Spain’s were $181 million. Further down the list is China, at $68 million in US onshore wind exports.
This was in a year when the US onshore wind installations were at their lowest level since 2014, according to the American Clean Power Association. This also came after the Inflation Reduction Act of 2022 incentivised new manufacturing facilities in the US.
Barla noted that under the previous Trump administration, 25% tariffs were imposed on Chinese goods, prompting the US supply chain to move away from Chinese imports.
Effect on OEMs
For example, GE Vernova had sourced 50-60% of its gearboxes from Chinese supplier NGC, said Barla. But in large part because of the existing China tariffs, NGC has now opened a manufacturing facility in India dedicated to supplying US-based GE Vernova, he added.
Of the three major OEMs currently active in the US, Vestas will be hardest hit by the Canada-Mexico tariffs, according to Barla. It sources blades from TPI, which has several facilities in Mexico, as well as the US.
In 2024, Barla said that the imports from Mexico of blades for Vestas will be in the range of $350-400 million. Vestas’ imports of towers from its southern neighbour would be around $150-200 million for the same time period, he said.
Vestas could not immediately be reached for comment.
Barla estimates that GE in 2024 will have imported blades worth $200-250 million from Mexico, and towers worth about $150 million. GE Vernova declined to comment on the figures.
If there are Brics tariffs, all major OEMs would be impacted, because they all import from India. “But GE will be the worst hit, as GE imports [are] much higher than Vestas and Nordex from India,” said Barla, citing the names of the most active OEMs in the US.
Brazil does not yet export much wind equipment to the US, but Vestas is planning to increase imports from Brazil to the US in the next three to four years, said Barla. “If implemented, it is likely to hit Vestas the hardest” vis-à-vis Brazil imports, he said.
OEMs in the US market could, in response to new tariffs, increase their blade purchases from US-based plants, though sourcing towers domestically would be harder because the market is at capacity. Towers are ‘logistically constrained’ products though, and would be expensive to import from outside the US, Mexico or Canada because of transport costs.
Additionally, Trump’s threatened Canada-Mexico-China tariffs would hit wind power more than its rival solar, said Barla. Solar installations are already increasing at a faster rate than wind.
Solar components are smaller and not as logistically constrained as wind’s, he said. “The magnitude of impact [in the US] would be far higher for wind,” he said. “Blades and towers are not easy to reroute.”