Media: Clean tech sector faces major challenges from rising US-China tariffs

The ongoing tariff war between the United States and China is set to deal a significant blow to the global energy transition, analysts at UBS Group AG's global wealth management arm announced.

In a note to clients dated April 4, UBS Wealth analysts, including Amantia Muhedini and Tiffany Agard, highlighted that the deepening trade rift between the world's two largest economies is likely to exacerbate challenges for US companies importing components crucial to decarbonization technologies, Caliber.Az reports via foreign media.

"Ultimately, tariffs are likely to push clean tech costs higher at a time when clean tech already costs significantly more in the US compared to other countries," the analysts wrote.

Despite initial resilience in stock indexes with clean energy themes following President Donald Trump's tariff announcement on April 2, UBS noted that this was likely due to the temporary haven provided by US utilities, which saw a brief surge. However, that trade has since reversed, and clean energy stocks have been pulled down in line with the broader market downturn.

UBS pointed out that, while other sectors approached record highs before the selloff, clean tech stocks have faced prolonged challenges, affected by rising borrowing costs and political attacks within the US. Meanwhile, global greenhouse gas emissions and temperatures reached record highs last year, further complicating efforts to address climate change.

"The current tariffs create further barriers for global progress toward climate objectives," the UBS analysts stated.

UBS also cautioned against viewing the potential reduction in emissions due to decreased economic activity triggered by Trump’s tariffs as a long-term benefit for the climate. "Lower economic activity does result in lower carbon emissions," they wrote. "However, this is not a durable approach as we have learned the last five years since the Covid-19 pandemic."

In a separate analysis, Barclays Plc analysts led by Maggie O’Neal warned that the tariffs are likely to significantly impact the US clean tech sector, with particular emphasis on US battery imports. "China’s outsized role as an exporter to the US means that US battery imports are likely to be particularly affected," the Barclays analysts noted. They further highlighted that the solar and electric vehicle (EV) sectors will also bear the brunt of these tariffs.

This shift in trade policy is expected to slow down electric vehicle penetration in the US and reduce profitability for EV manufacturers, particularly in the European Union, the Barclays analysts concluded.

By Vafa Guliyeva