New trade tariffs and increased import restrictions on the US onshore wind sector could lead to higher overall costs, according to a new report from Wood Mackenzie.
The report, titled “Trade war hits US onshore wind,” warns that such cost increases could threaten the viability of projects and potentially slow the growth of the industry.
The report concludes that proposed US tariffs of 25% on imports from Mexico and Canada and an additional 10% on Chinese imports could increase US onshore wind turbine costs by 7% and overall project costs by 5%, with the current US supply chain configuration.
Wood Mackenzie senior analyst Endri Lico said: “In a scenario with universal tariffs of 25% on all imported products, the impact would be even greater, with turbine costs potentially increasing by 10% and overall project costs by 7%.
“This would have material impacts on the industry, putting some projects at risk due to economic factors.”
The US wind industry is heavily reliant on imports, particularly components such as blades, transmissions and electrical systems.
In 2023, imports of wind-related equipment to the US were valued at $1.7 billion, of which 41% came from Mexico, Canada and China.
“Tariffs are not an unprecedented situation for the wind industry,” Lico said.
“Wind industry peers are waiting for specialization of tariff legislation to fully assess the impact.
“Tariffs imposed during Trump’s previous term had minimal impact on the US wind energy segment, while a more accommodative monetary policy may soften the impact of tariffs.”
According to the report, the proposed tariffs will have an incremental impact on the economics of US onshore wind energy, increasing the levelized cost of energy (LCOE) by 4% in the near term.
Under the 25% universal tariff scenario, LCOE will increase by 7%.
“Supply chain actors are waiting for the dust to settle, exploring their options,” Lico said.
“We expect wind energy manufacturers to take a combination of measures to mitigate the impact of tariffs, including rerouting and restructuring their supply chains and assembly lines, strengthening localization in the United States, and increasing their prices.”
