US tariffs on energy products are not new — they were first imposed by the Biden administration — and the motivation behind them is multifaceted.
Under former US president Joe Biden the rationale was fostering clean energy industries and combating climate change. His administration believed that encouraging domestic production of solar panels and electric vehicles (EVs) could create jobs, bolster the economy and reduce reliance on foreign energy sources. In addition, tariffs were seen as a tool to pressure other countries to commit to higher environmental standards.
Under President Donald Trump the tariffs are primarily aimed at protecting US industries and reducing the trade deficit with countries like China. Trump has argued that unfair trade practices and the dumping of cheap energy products into the US market are harming domestic manufacturers.
These are two sides of the same coin. Geopolitical tension has played a significant role in the decision to impose tariffs. Relations between the US and China have been strained for years, with numerous conflicts over trade, intellectual property and regional dominance. By increasing tariffs on energy products, both administrations aimed to weaken China’s stronghold in the global energy market and reduce dependency on Chinese manufacturing.
The tariffs are also part of a broader strategy to assert US dominance in the clean energy transition. By “promoting” domestic production, the US wants to position itself as a key player in the global energy landscape, ensuring that it retains influence over future technological advancements and market dynamics — a path China forged in the 1950s and has been working on tirelessly through its five-year plans.
The increased tariffs on solar panels, EVs, aluminium and steel have had a notable impact on global energy prices, particularly on the costs associated with transmission, oil, gas and the broader energy transition. As essential materials for constructing pipelines, drilling rigs and renewable energy installations, the increased tariffs have led to higher costs for infrastructure projects.
This has led to high prices of energy, which have been passed on to consumers through tariffs, resulting in higher fuel and electricity prices. Consequently, the intended benefits of fostering domestic industries and promoting clean energy are accompanied by the unintended consequence of increased financial burdens associated with achieving energy independence.
Moreover, the tariffs have created uncertainty in the market, leading to price volatility. As countries respond with their own trade measures and retaliatory tariffs, the stability of global energy markets is challenged, influencing the prices of oil, gas and other energy commodities.
These trade wars are about market dominance — Africa’s
1.5-billion people make for a potentially lucrative market. Developing countries like SA are caught between these two nations and will suffer the most as we are unfortunately a net energy importer that relies on aid and technical assistance from other nations.
Developing countries are particularly vulnerable to these tariffs. Our reliance on imported energy technologies and fuel means we face higher costs when tariffs are imposed. Developing countries also often have fewer financial resources to absorb the increased costs associated with tariffs.
The volatility in energy prices caused by geopolitical tension will create instability in our markets, slowing economic growth and worsening poverty — making it challenging to plan and invest in long-term energy projects.
Developing countries may find themselves caught in the crossfire of trade wars between larger economies, with retaliatory measures affecting their access to essential goods and services. Africa urgently needs efforts to meet energy needs through self-sufficiency and innovation.
As Kwame Nkrumah famously said, “We face neither East nor West; we face forward.”
• Mashele, an energy economist, is a member of the board of the National Transmission Company of SA.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.