A week of U.S. tariff pronouncements and responses from other countries has given the global economic order a wobble that resembles a Jenga tower.

Even after President Donald Trump said on Wednesday that he would pause many of the tariff increases for 90 days, a universal tariff of 10 percent remains in place. 

These economic gyrations are probably terrible for the clean energy economy, which relies on large investments based on the promise of long-term returns. It just doesn’t make sense to invest when costs are soaring and you don’t know what the rules of the game are going to be.

But within this volatility, there must be something good, right? This is what I asked in several interviews. The responses showed that there may be some positives in this chaos, but they will take time to emerge and most of the benefits will be outside of the United States.

“The bottom line is that the world runs on imported fossil fuels under the umbrella of the Pax Americana,” said Kingsmill Bond, an energy analyst at Ember, a London-based energy think tank. “As Trump destabilizes that, then people will look to their own domestic energy sources, which in most cases means renewables and electrification.”

The new order that Bond is describing would push the United States to the side. While this view is optimistic about global growth of renewables, heat pumps and EVs, it also indicates a slower and dirtier path for the U.S.

Bond argues that since most countries do not have plentiful oil and gas within their borders, they need to import it and have confidence in the stability of supply and pricing. As that confidence erodes, they will look to alternatives.

Most countries do not have substantial solar panel, wind turbine or battery production, so reliance on those resources would also require imports. But the difference compared to fossil fuels is that a shipment of solar panels, for example, can provide benefits for 30 years. The buyer isn’t signing up for dependence on daily shipments of fuel.

This isn’t some fanciful theory. China already has a set of renewable energy policies that look a lot like what Bond is describing, as does the European Union.

The key theme here is “security.” I’ve been noticing the frequency of that word in energy discussions ever since reading a research note last month from Jeff Currie, chief strategy officer of energy pathways at Carlyle, an investment firm.

“Security is now paramount,” he wrote. “The energy transformation is on the cusp of reaccelerating. Nuclear and renewable energy are likely to continue to expand rapidly in the years to come. Fossil fuels, however, will also expand—just more slowly—as natural gas replaces oil and coal fades.”

This shift will not be motivated by concerns about climate change, he said. Instead it will mainly be about countries trying to insulate themselves “from geopolitical, macro, and financial risks.” (The indispensable Open Circuit podcast from Latitude Media discussed this research in last week’s episode.)

Currie’s note, published before the flurry of tariff actions over the last week, argues that global leaders will respond to volatility by seeking stability.

These aren’t new ideas. In 2021, the oil giant Shell published a report on energy transformation scenarios that envisioned three likely paths for the world.

The first two scenarios were versions of a successful transition to carbon-free energy, although they differed in whether the shift would happen fast enough to meet the targets of the Paris Agreement.

The third scenario looked a lot like what we’re living through right now. Shell called this the “Islands” scenario.

“In Islands, governments and societies decide to focus on their own security, with a new emphasis on nationalism threatening to unravel the post-war geopolitical order,” the report said. “Although the normal course of equipment and infrastructure replacement and the deployment of cleaner technologies bring progress and eventually net-zero emissions, the world overshoots the timeline and does not achieve the goal of the Paris agreement.”

Shell expanded on some of these ideas in the 2023 edition of the report.

I reread the 2021 report this week after Gernot Wagner, a Columbia University economist, pointed it out to me as an eerily prescient description of our times. 

“None of this is, in any way, shape or form, rational,” Wagner said of the tariffs.

“We’ll all be poorer for it. The planet will be hotter for it.”

— Gernot Wagner, Columbia University economist

He was stunned by the details of Trump’s actions, such as a 46 percent tariff on Vietnam, which is the leading exporter of solar panels to the United States. Even with the 90-day pause, this trade relationship is now much less stable.

Wagner remains confident that the transition away from fossil fuels has momentum that can’t be stopped, but thinks Trump’s actions could slow that progress in ways that are harmful for everyone.

“We’ll all be poorer for it. The planet will be hotter for it,” he said.

Trump administration officials said on Wednesday that the 90-day pause will allow for time to negotiate agreements with each country. The main exception was China, which has retaliated against U.S. tariffs by placing tariffs on U.S.-made products, leading to a back and forth of additional increases. The administration left China out of the 90-day pause and has singled out the country for being unwilling to negotiate.

Treasury Secretary Scott Bessent told reporters that Trump’s goal from the beginning was to get to this point, with countries willing to set up new trade deals with the United States.

“This was his strategy all along,” Bessent said.

Even a 10 percent tariff is a significant increase, putting aside the much higher increase for goods from China. Many U.S. renewable energy businesses face the immediate challenge of trying to make money in a market in which key components are going to become more expensive.

This is something I won’t sugarcoat. If you are a developer, installer or other business that uses solar panels or wind turbines, your life just got much more difficult.

“Tariffs and tariff uncertainty will change project economics across a wide swath of U.S. power assets, meaning that recently negotiated contracts for new power plants and transmission facilities may not be financeable under present terms,” said Tyler Norris, a fellow at the Nicholas School of the Environment at Duke University and a former vice president at a large renewable energy developer. “As a result, delays can be expected across the board for U.S. power infrastructure buildout.”

This is on top of the increase in solar panel prices that was happening even before these latest tariffs, as I wrote about last week.

“It’s not great if you’re U.S.-based now,” said Bond, the London-based analyst. “The global story is going to keep on going. The U.S., sadly, is going to get held back.”

Other stories about the energy transition to take note of this week:

Trump’s Tariffs Will Hurt His Manufacturing and Energy Goals: One of the many baffling things about the recent tariff announcements is that the Trump administration is making life much more difficult for the manufacturers and energy producers the president said he would like to help. The contradictions are striking, as Jeff St. John reports for Canary Media. A key point here is that a recession, which is more likely under these tariffs, is bad for all forms of energy.

Batteries Stand to Take a Major Hit with Tariffs: Utility-scale battery energy storage has been a fast-growing contributor to the U.S. electricity grid. But the Trump administration’s tariffs threaten to slow this growth, as Brad Plumer reports for The New York Times. While the United States is increasing its manufacturing capacity for lithium-ion batteries, China remains the main supplier to the U.S. market, and the costs of those batteries are set to soar with the latest round of tariffs.

Trump Wants to Author a Coal Comeback: President Donald Trump signed executive orders on Tuesday that seek to keep existing coal-fired power plants from closing, among other steps to boost the coal economy, as my colleague Marianne Lavelle reports for ICN. We saw some actions like this in the first Trump administration, and they were hindered by coal’s inability to compete with cheaper and cleaner fuels. It remains to be seen if the administration has figured out how to overcome these market challenges.

Used EVs Could Be a Winner in a Tariff-Wrecked Market: It’s not a good time to be buying a car, as tariffs are about to make many vehicles much more expensive. But if we’re forced to find a silver lining, there are many bargains in the used EV market, according to Patrick George of InsideEVs. He has a nice rundown on models and prices that are good deals, including the Kia EV6, the Hyundai Ioniq 5, and, if you’re into that kind of thing, the Tesla Model 3.

Can Congress Get Rid of California’s Vehicle Emissions Waiver? Senate Republicans are planning to introduce resolutions to reject former President Joe Biden’s waiver to allow California to set its own vehicle emissions standards, even though the Senate parliamentarian has determined that these rules cannot be undone. Republicans have indicated that they may not follow the parliamentarian’s decision, as Kelsey Brugger and Timothy Cama report for E&E News. Democrats have argued that Biden’s waiver is not a rule and therefore cannot be altered by the Congressional Review Act and the parliamentarian agreed. It’s not clear how far Republicans will go to try to remove California’s ability to set stricter emissions standards.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].

Dan Gearino

Reporter, Clean Energy

Dan Gearino covers the midwestern United States, part of ICN’s National Environment Reporting Network. His coverage deals with the business side of the clean-energy transition and he writes ICN’s Inside Clean Energy newsletter. He came to ICN in 2018 after a nine-year tenure at The Columbus Dispatch, where he covered the business of energy. Before that, he covered politics and business in Iowa and in New Hampshire. He grew up in Warren County, Iowa, just south of Des Moines, and lives in Columbus, Ohio.

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