Trade Challenges and Opportunities for the Battery Industry in Trump’s Second Term

✍🏻 Cho Seongdae, Director, Trade Studies and Cooperation Department, Korea International Trade Association (KITA)

On November 5, former U.S. President Donald Trump won the 60th presidential election, securing his return to the White House as the 47th president on January 20 next year. Trump reclaimed six key swing states that he had lost in the previous election, bringing his total to 312 electoral votes. He also won the popular vote by approximately 3.6 million votes, while the Republican Party simultaneously gained control of both the Senate and the House of Representatives. The 2024 election results represent a decisive “Red Sweep” for Trump and the Republican Party, signaling significant changes in the U.S. political landscape that will inevitably influence industrial policies. For the battery industry, Trump's skepticism toward climate change policies and electric vehicles (EVs) suggests unavoidable shifts and impacts.

The Repeal of IRA EV Tax Credits and Its Impact

Trump has repeatedly criticized the Inflation Reduction Act (IRA), a landmark policy of the Biden administration and the democratic, calling it “the largest tax hike in history” and a “green scam,” vowing to repeal it on his first day in office. The IRA incentivized demand for EVs by offering tax credits of up to $7,500 and supported advanced manufacturing with additional tax credits for EV batteries. Predicting the exact degree of change to EV-related subsidies remains challenging. Although Republicans now control both chambers of Congress, federal lawmakers may face political burdens when repealing the act that have brought significant investments and job creation to their constituencies. However, it is unlikely that the legislation will remain untouched. The most likely scenario includes partial amendments to the law via Congress or a reduction in benefits through presidential executive orders.

USMCA review and Ripple Effects of Tariffs on Mexico and Canada

During his campaign, Trump raised the possibility of renegotiating the United States-Mexico-Canada Agreement (USMCA), originally scheduled for review in 2026. He further stated his intent to impose a 25% tariff on imports from Mexico and Canada unless issues such as illegal immigration and drug trafficking are addressed. While both countries have already initiated immediate discussions with the U.S., no concrete agreements or tariff withdrawals have been announced yet. Battery companies relying on USMCA-based supply chains must closely monitor these developments. Beyond the 25% tariff, preparations must be made for potential changes to rules of origin and other trade provisions during the 2026 review.

Turning Challenges into Opportunities: Strategic Response for Korean Battery Firms

The global battery industry continues to face challenges as the EV market navigates its “chasm” phase. While Trump’s pledges to repeal the IRA and impose tariffs could pose headwinds, Korean firms with established U.S. operations may partially offset negative impacts through corporate tax cuts for manufacturers. Furthermore, Trump’s persistent push to counter China, the potential recovery of EV market demand, and advancements in next-generation batteries remain positive constants that should be factored into response strategies.

The shift in U.S. leadership is beyond our control. What matters is our ability to strategically adapt to these changes. Although change comes with costs, it also creates opportunities. A Trump administration—limited to a single four-year term—is expected to act swiftly and decisively, much like an EV accelerating from a stop. As such, year 2025 will demand a level of agility and preparedness from the battery industry like never before.