Key Asia-Pacific clean energy supplier nations signal willingness to work with Trump on tariffs

Leading clean energy and electrical component suppliers Japan, South Korea, Thailand, and Vietnam have indicated they want to cut trade deals with the US to limit economic fallout from elevated tariffs that will take effect Wednesday.

Vietnam, whose biggest trade partner is America, has offered to drop tariffs to zero while Thailand, which ships about 18% of its exports there, has announced it will step up purchases of US goods and slash tariffs on imports from there.

If agreements do result, and depending on terms, those four nations could gain preferential access to the world’s largest economy and energy market. The US will require several trillion dollars investment to expand electric generation, energy storage, and grid capacity to meet forecast power demand through 2040.

Japan is a key source for electrical and electronic equipment used in US grid and renewable energy applications, while South Korea exports numerous commodities and products for energy-related purposes such as aluminum, boilers, copper, electrical equipment, larger power transformers, nuclear reactors, onshore wind towers, and steel.

Aluminum, copper, and steel are except from reciprocal tariffs, according to the administration.

Thailand and Vietnam are two of the biggest sources of crystalline silicon modules that the US solar industry imports, although most are Chinese branded. Vietnam is also the leading supplier of onshore wind turbine generators and parts.

The US is not expected to become self-sufficient anytime soon in battery materials, numerous electrical components such as switchgear and transformers, upstream solar materials and cells, offshore wind turbine parts, transition pieces, and installation vessels, and onshore wind turbine blades and generators.

Even as Trump has shown willingness to deal with those nations, he has stepped up his invective against the EU, also a leading provider of equipment, goods, and materials used by the energy sector here.

He said the EU will have to commit to buying $350bn of energy, presumably crude oil, its derivatives, and liquid natural gas, for him to consider rescinding Wednesday's 20% tariff on goods from the trade bloc.

Last week, President Donald Trump announced the US would begin collecting a 10% universal tariff on all imports starting Saturday, with no exceptions for companies or specific products.

Certain nations – allies and foes - that he said have been “ripping off” the US on bilateral trade would instead, face higher “reciprocal” higher tariffs of between 11% and 50%.

The US has large trade deficits with Vietnam, Japan, South Korea, and Thailand which rank as the third, seventh, eighth, and tenth largest in dollar terms.

The reciprocal levies were derived from one half the combined tariff rates other nations impose on US goods and factor in “non-monetary barriers and other forms of cheating” including currency manipulation, according to Trump.

The Office of the US Trade Representative later provided mathematical formulas used to derive reciprocal tariffs that also account for regulatory barriers to American products, environmental reviews, differences in consumption tax rates, compliance and hurdles and costs, among other inputs.

The result is that the US on Wednesday will begin collecting a 24% tariff on goods from Japan, 25% from South Korea, 36% from Thailand, and a whopping 46% from Vietnam. China, which has announced retaliatory tariffs, and vowed to “fight to the end” and take countermeasures against the US to “safeguard its sovereignty,” was hit with 36%.

While Trump’s focus is conventional energy, depending on how long his tariffs remain in effect, they are likely to raise costs, perhaps significantly for oil and gas producers and downstream players.

If his tariffs induce slower economic growth at home and overseas, this could further depress oil prices, reducing the incentive to invest in new fossil production. That could open opportunities for clean alternatives which already are cheaper to build and operate.

Trump views tariffs as a way to collect revenue that could be used to reduce chronic and growing federal fiscal deficits and as a weapon to wring trade concessions.