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The Electric: These U.S. Battery Companies Think Full-Throttle Tariffs Are Great

President Donald Trump’s sky-high tariffs have triggered worries of a bloodbath in the electric vehicle and battery industries. But this week, we report on companies that are thrilled with the levies.

A lot of companies and investors are predicting a bottom-line disaster if President Donald Trump doesn’t seriously scale back or—better yet—eliminate the double- and triple-digit tariffs he has tacked onto imports. But Vikram Handa, managing director of Epsilon Carbon, isn’t one of them. Handa, whose India-based company is building a $650 million synthetic graphite factory in North Carolina, says the tariffs will make the difference as his company fights stiff Chinese competition.

Gene Berdichevsky, co-founder of California-based Sila Nanotechnologies, says much the same: Though the tariffs are roiling the economy and markets, his company—building a silicon anode factory in Washington State—needs them to help build a U.S. battery supply chain and break the country’s dependence on Chinese producers. “The trick is the transition is insanely hard, and so I don’t know if they’ll pull it off,” Berdichevsky told me. “But I think that’s kind of the ballgame.”

Trump’s tariffs should have surprised no one in the auto, car parts and battery industries: He made the tariffs a prime plank of his campaign for a second term, and he seemed to hold a special grudge against non-U.S. carmakers—and EVs in particular (more on that below). Though he didn’t mention foreign-made EV batteries and components, they are flooding the U.S. market, while the U.S. exports no batteries to speak of.

The undeniable point in the case of both EVs and batteries is that American manufacturers are way behind. Trump meant the tariffs to throw up a ring fence around the U.S. to allow American startups to develop competitive EV, battery and materials industries, protected from serious Chinese competition.

It’s not clear that the tariffs will succeed, especially since Chinese companies are so dominant and U.S. companies still depend on them for parts. But it’s fairly certain that U.S. EV and battery companies would have a far harder time without the tariffs.

It’s still not clear where tariffs on autos and batteries will end up. As of now, most foreign cars and auto parts, including electrodes and batteries, face a 25% tariff. Last week, Trump somewhat softened the blow on cars made in Canada and Mexico for two years. Levies on Chinese-made batteries, which are about three-quarters of the global market, remain at 145%. That alone could add $12,000 to the price of a high-end electric Ford F-150 Lightning if passed along fully to consumers.

In an earnings call last week, General Motors said the tariffs would cost the company up to $5 billion this year, or up to a quarter of its expected profit. Stellantis, which imported more than 350,000 vehicles into the U.S. last year, suspended sales and revenue guidance for 2025, as did Mercedes-Benz. Aston Martin, Jaguar Land Rover, Audi and Porsche halted the shipment of some or all their vehicles into the U.S.

None of the companies singled out the impact of the tariffs on their electric vehicles, but the levies fall with particular weight on the nascent Western EV industry.

Over the last week, battery companies serving the U.S. market, too, predicted a tough year: South Korea’s LG Energy Solution, GM’s primary battery provider and also a supplier to Tesla and Hyundai, said its second-quarter revenue would drop compared to the first quarter and that it would cut 2025 capital investments 30% because it expects to sell fewer batteries. Its South Korean rival, Samsung SDI—which supplies BMW, Rivian and Stellantis—told analysts that its U.S.-assembled batteries would be exempt from tariffs, but not the materials inside the batteries. That would drive up its battery prices, the company said.

In a note to clients last week, Wedbush Securities analyst Daniel Ives called the auto tariffs “untenable” and a threat to the industry. Trump’s recent backtracking on some of them, he argued, are “like putting a Band-Aid on a bullet wound, with U.S. automakers now dealing with the repercussions moving forward as this Twilight Zone situation will change the paradigm for the U.S. auto industry for years to come.”

But Epsilon’s Handa says tariffs on at least Chinese graphite companies have to be high because they otherwise tend to undercut embryonic U.S.-based rivals attempting to gain a footing.

Handa, a naturalized U.S. citizen with bachelor’s degrees in math and engineering from Tufts University, founded Epsilon in 2010. The company makes coal tar distillates—petroleum byproducts used as preservatives, protective coatings and an ingredient in rubber—producing them from steel production waste obtained from Handa’s father-in-law, Sajjan Jindal, who chairs JSW Group, owner of India’s largest steel mill. In 2020, amid the battery and EV investment frenzy, Handa formed an Epsilon subsidiary to make synthetic graphite for battery anodes involving the same raw material.

China produces virtually all the world’s synthetic graphite for battery anodes, but Handa saw projections of EV industry growth and began scouting for a U.S. factory location to make 30,000 tons of the material a year, enough for some 400,000 EV batteries.

In 2023, he settled on a site not far from Wilmington, N.C., where he said Duke Energy agreed to build a substation to provide Epsilon with 250 megawatts of power. In December, the Department of the Treasury granted Epsilon a $115 million income tax credit under the Inflation Reduction Act, which Handa said “helps your cash flow a bit once you start” production.

Trump has denigrated EVs and the IRA and threatened to seek repeal of the law, which would eliminate that tax credit. Either way, Handa said he plans to break ground in the beginning of next year at the North Carolina site and start production in 2027.

Chinese producers in the intensely competitive industry have so far tended to swallow tariffs—dropping their prices to maintain market share. They are able to do so in part because local governments in China often provide land and electricity at cut-rate prices, and sometimes for free, and regional banks frequently lend at low rates.

But Handa said most Chinese suppliers would find it virtually impossible to absorb the 145% tariff given that synthetic graphite currently sells for around $5 per kilogram in China. With the tariff, that graphite would sell for about $12/kg in the U.S., according to Benchmark Mineral Intelligence.

“That would be a level playing field,” Handa said. “I think the tariffs are good for us—for the ‘make in America’ story—because we start getting more competitive. Because the Chinese are really cheap, are subsidized, are dumping.”

Foreign buyers have turned away from U.S. assets since Trump’s tariff announcement.

The impact of the falling dollar is rumbling through tech companies’ earnings and threatens to reduce investments in the industry for both established players and startups.

Since President Donald Trump’s tariffs announcements a month ago, the dollar has fallen to its lowest level since 2022. The move was so big that companies including Meta Platforms, Microsoft and others highlighted the impact—in both the first quarter and the rest of the year—on their earnings calls.

Depending on where they sell, what they buy and the currency their customers use to pay, the short-term impact could be positive or negative. For many companies, it’s a wash. Longer term, if the dollar stays down or falls further, U.S. companies could find it harder or more costly to raise money from foreign investors.

For Microsoft and Meta, the stronger dollar in the first quarter hurt revenues a bit. The dollar’s decline this month is expected to reverse that and slightly boost revenue this quarter because sales in now-stronger foreign currencies are worth more in dollars. U.S. companies that buy a lot from abroad will see costs rise, while foreign companies whose products are priced in dollars will take a hit.

“Currency matters to company fundamentals,” said Sean Sun, a portfolio manager at Thornburg Investment Management. Many semiconductor companies, regardless of where they’re headquartered, make most of their revenue in dollars because they sell heavily to U.S. customers, he said.

Dutch chip equipment maker ASM International last week cut its guidance for this year’s revenue, citing recent volatility in the value of the dollar. ASM expects 80% of its sales to be in dollars this year, but it reports earnings in euros.

The falling dollar, along with a rout in U.S. equities and declining prices for U.S. government bonds, set off alarm bells among investors after Trump’s April 2 tariff announcement. These movements were unusual because normally when bond prices fall, which boosts yields, investors buy dollars to invest in Treasury bonds to get that higher yield. In this case, investors were just selling U.S. assets, worried that Trump’s policies would make the U.S. a riskier place to invest.

“The dollar is being punished right now, and it is absolutely clear that it is reflecting that fund flows are going out of the U.S., because of the uncertainty in the U.S. markets and because of the perceived opportunities abroad,” said Marc Malek, chief investment officer at wealth management firm Siebert Financial.

The DXY index, which measures the value of the U.S. dollar relative to six other major global currencies, was over 104 on April 1, right before Liberation Day. Since then, it has dipped as low as 98, though it has recovered a tiny bit since. Those might seem like small fluctuations, but in currency markets that typically trade within a tight range, they’re substantial moves.

There are warning signs that foreign investors are cutting back on their U.S. exposure. Over the last few months, investors outside the U.S. have nearly halted their inflows in exchange-traded funds that invest in U.S. stocks, according to data from Nikolaos Panigirtzoglou, JPMorgan Chase’s global markets strategist. In the month of January, they poured nearly $16 billion into such funds; in April, their flows had fallen to less than one-fourth that level. Investors outside the U.S. have also been selling U.S. bond funds, he said.

If the buyer’s strike by foreign investors continues, that could drive down markets. Foreign investors’ share of the total U.S. stock market capitalization rose from 18% in 2009 to 27% in 2023, according to data from the Securities Industry and Financial Markets Association, a trade group.

Panigirtzoglou argues that even if U.S.-based investors continue to buy U.S. stocks, we could still see a downward spiral in which a flight of foreign capital from the U.S. stock market pushes the dollar even lower.

Some foreign investors seem to be souring on buying private assets in the U.S., too. Canada Pension Plan Investment Board, Canada’s largest pension plan with over $500 billion in assets, has historically invested heavily in U.S. infrastructure and private equity. However, recent media reports suggest that the fund is shying away from U.S. commitments amid the uncertainty stoked by President Trump’s trade policies and his political threats, as are several other large funds in Canada and Denmark.

Siebert Financial’s Malek, who invests in U.S. growth companies, typically doesn’t worry much about how currency moves might impact tech companies that sell their wares outside the U.S. Historically, he says, a weaker dollar has benefited his holdings. “But obviously, this time, it’s different,” he said.

There may be worries about tariffs and the rule of law but one cannot discount US resilience

Recently I’ve begun to think perhaps I’m too much of a gloom and doomer about the US economy and its place in the world. I was struck recently by a couple of pieces, one by Joel Kotkin on UnHerd, arguing that we shouldn’t conflate American government with American people, or America, the place. The former may be wildly dysfunctional now, but it hasn’t stopped the dynamism of US businesses, entrepreneurial zeal in America (still much higher than in Europe), or the fact that the checks and balances of the US system (which are admittedly being tested right now) remain the best alternative to Chinese authoritarianism.

I would agree with this (unless Europe gets its act together, launches eurobonds, and really integrates and becomes a political entity capable of anchoring the global economy and defending liberal democracy). I was struck at an investor conference I attended last week at how, despite the political turmoil in the US, American business is just getting on with things: reassessing risk, rejiggering supply chains, and realising that Donald Trump is temporary (barring a true constitututional crisis in which he refuses to leave after his second term).

Of course, there were huge worries about tariff uncertainties and the rule of law and the general economic and political uncertainty created by the US president. But there was also the can-do attitude that has always made the US the most dynamic country in the world, a place where you can still strive, fail, fall, dust yourself off, get up and try again tomorrow with the belief that things will get better. The conference I attended was in Florida by the way, and people didn’t seem nearly as pessimistic there as they are in New York. I am planning to devote more time this summer to getting out and talking to Main Street businesses and real people in red state America about how they see the current moment.

I was also struck by Andy Haldane’s piece in the FT last week entitled “The rise of the panicans”, which posits that we’ve all become too hysterically negative about the state of the world, and the US in particular. Haldane, who I would put right up there as one of the smartest economists in the world, rightly points out that many of us in the media and in financial circles have become “24/7 catastrophisers”. It’s a point that came home to me this past Friday, with the new US employment numbers coming in much stronger than expected. Now, we know jobs are a backward-looking indicator. And we also know that the real effects of tariffs, including inflation and supply shortages, won’t really hit for a few weeks (the last pre-tariff ships are sailing into port right now). Finally, China is looking more open to trade talks, which buoyed markets late last week.

I’m lucky to have my colleague Ed Luce back in the seat as my respondent today (don’t get too excited, this is a one-off!). So, Ed, my question to you is this: do you think predictions of a dismal summer in which inflation spikes and the economy falls into recession may turn out to be flat-out wrong? I know you, like me, have been down on Trump for a long time, but are we giving him too little credit here? Could we see him pull a positive rabbit out of the hat over the next few months? Or is this entire column just a desperate effort on my part to say something contrarian?