LG Energy Solution is shifting its focus towards cost-effective LFP batteries for the US market. — Reuters
SEOUL: South Korean battery manufacturers are set to benefit from the 145% tariff imposed by the second Donald Trump administration in the United States on Chinese-made goods, including lithium-ion batteries for energy storage systems (ESS).
This significant tariff hike aims to curb the competitive edge of Chinese batteries, which previously capitalised on lower levies than electric vehicle (EV) cells.
On April 10, the White House said that the 125% tariffs on Chinese imports would rise from 34% to 125%, on top of an existing 20% tariff.
This unprecedented increase is part of US measures addressing concerns over fentanyl influxes from China, effectively raising the prices of Chinese products 2.45 times.
According to a report by the Atlantic Council, a Washington-based think tank, China exported lithium-ion batteries worth US$15.3bil to the United States last year.
With tariffs, the value of these exports could soar to approximately US$37.5bil this year if trade volumes continue at a similar scale, making Chinese cells much more expensive in the US market.
South Korean market tracker SNE Research noted that Chinese firms captured an 87% share of the North American ESS battery market in the same period.
“Chinese lithium iron phosphate (LFP) batteries have been well-received in the United States due to their competitive pricing over South Korean rivals,” said an industry source, who spoke on condition of anonymity.
“These LFP products, which allow for a larger number of cells for EVs, where the battery space is smaller, have been preferred by data centres for their cost efficiency.”
The source added: “Although Trump has left the door open for negotiations, Beijing is not budging, implementing stronger retaliative measures.
“Even if Washington-Beijing talks come through and reduce the tariffs set by the United States, it will be unlikely for Trump to completely walk back on his tariff threat against China to return the rates to the previous 10.9% levy on Chinese ESS batteries.”
China was able to dominate the ESS market in the United States by setting low battery export prices by weight, widening the gap with South Korean competitors.
As of last November, the cumulative Chinese exports to the United States totalled 678,000 tonnes – roughly 11.7 times greater than South Korea’s 58,000 tonnes, according to the Atlantic Council.
LG Energy Solution is shifting its focus towards cost-effective LFP batteries for the US market, moving away from nickel, cobalt and manganese cells.
“Due to the rising uncertainties on US trade policies, we cannot predict the impact of Trump’s 145% tariffs on the Chinese companies,” said an LG Energy Solution official. — The Korea Herald/ANN
