Trump’s tariffs: a new headwind for clean energy infrastructure?

This week, US president Donald Trump stated that he would impose tariffs of 25% on all steel and aluminium imports into the US, with these measures beginning on 12 March, according to an executive action published by the White House.

The move by the US president is designed to protect domestic steelmakers, but it will affect US allies, including Canada and Mexico, and could sharply raise costs for American manufacturers that import the metals.

This follows Trump already introducing a 10% tax on all products from China, with the US president also telling reporters that he would impose new reciprocal tariffs on countries that have levies on US goods within the coming days.

The tariff announcement comes three weeks after Trump’s return to the White House, which has already marked several blows for the US energy transition, including withdrawal from the Paris Agreement on climate change, the rollback of clean energy initiatives, a temporary pause on leasing and permitting for wind projects, and the lifting of export restrictions on liquefied natural gas.

So, could the metal tariffs mark yet another blow to clean energy transition investment in the US, with renewable infrastructure — including wind turbines, solar energy, hydropower and energy storage — all relying on these metals?

Inflation risk

After a few quiet weeks from investors on US policy, those who have spoken out have expressed mixed feelings about the tariff announcement, one concern being inflation risk.

Some experts suggest that Trump’s new round of Tariffs could prompt a wider trade war, pushing prices up more generally, with Capitol Economics suggesting that the annual rate of US inflation could increase from 2.9% to as high as 4%.

Indeed, Tancrede Fulop, senior equity analyst at Morningstar, told Net Zero Investor that tariffs are likely to drive inflation, as power prices would need to increase to compensate for higher construction costs.

“If the higher construction costs that result from tariffs are not offset by higher Power Purchase Agreements (PPA) prices, then yes, these tariffs could impact investment flows in US renewable infrastructure,” Fulop said.

However, inflation is the enemy of clean energy companies, slowing interest rate cuts, or even leading to higher rates, hurting renewable infrastructure investment.

€204bn Dutch asset manager Robeco, which had previously leaned heavily into the US to take advantage of Inflation Reduction Act (IRA)-related opportunities, trimmed its exposure to US clean power infrastructure and reallocated towards Europe following Trump’s election.

The number one reason for the reallocation being increased inflation risk under Trump.

“The Trump administration’s pro-growth, protectionist and deregulatory agenda is likely to increase inflation and keep interest rates higher for longer,” Chris Berkouwer, portfolio manager at Robeco, told Net Zero Investor.

The pain felt by the renewables sector during the post-Covid inflation period is evident in share prices. The world’s largest wind developer, Ørsted, fell from highs of 1,351.50 DKK in January 2021 to a dismal 271.50 DKK in February 2025.

“Europe, especially France and Germany, has been in an ugly economic place for a long time. But inflation prospects look much better going forward,” Berkouwer added.

However, unlike Robeco, not all investors are as outspoken about how much Trump will make them reconsider their clean infrastructure exposures. Private equity company KKR and Dutch pensions provider APG both told Net Zero Investor that Trump 2.0 will make no immediate difference to their strategic thinking around clean infrastructure allocations in the US or Europe.

Supply chain worries

Alongside, inflation risk anxiety, some have expressed concerns about how Trump’s tariffs will affect the supply chain for renewable infrastructure parts.

However, Brett Castelli, equity analyst at Morningstar, told Net Zero Investor that while transitory issues could emerge depending on how high tariffs go, “we would not expect it to be a big issue for the sector as a whole”.

“In many cases, supply chains for renewable equipment in the US have already shifted to US-produced raw materials — such as steel — to qualify for additional incentives under the Inflation Reduction Act (IRA),” he said.

In fact, Fulop argues that tariffs shouldn’t be the main worry for investors in US clean energy. “The bigger question is what happens with subsidies for renewable energy under the IRA,” he said.

“Tariffs could prove to be a modest headwind, but we would expect that, over time, any higher costs would be passed through to customers via higher PPA prices,” he added.

This comes as one of Trump’s latest executive orders included a pause on key IRA funding items and the elimination of the electric vehicle mandate. However, it is important to note that his administration would need to jump through many hoops to dismantle Biden’s IRA.

Energy demand

However, Tom Atkinson, portfolio manager at AXA IM, notes that the clean energy outlook remains positive despite Trump’s tariffs and anti-green agenda. His main point is that rising power demand in the US will continue to drive the growth of renewables.

Currently, the US energy mix is diversified, with 40% of capacity coming from renewables (including nuclear). However, 15% of power capacity remains coal-powered, which will undoubtedly diminish in the coming years given its unfavourable economics and the multitude of decarbonisation commitments among utility firms, he said.

“Until recently, fuel switching has been driving growth in renewables. However, we are now in an era of power demand growth, driven by data centres, domestic reindustrialisation and electrification.

“This increasing demand underlines what we believe is a long-term trend, with potential investment opportunities across the spectrum, from power companies to those involved in the supply chain,” he explained.

Alongside this, Trump’s support for AI and technology is strong. The Stargate project, announced after his second inauguration, is a $500bn AI infrastructure venture to build data centres around the US.

This sentiment was also echoed by Jan-Willem Ruisbroek, managing director CPI/infrastructure and private natural capital at APG last week.

“Data centre deployment, partially driven by the increasing power needs of AI applications, is a significant driver of near-term electricity demand growth,” says Ruisbroek, noting that APG still has an appetite for investing in renewable energy in the US.

It is also important to note that Trump cannot run for re-election again in 2028, so these policies represent only four years in the grand scheme of things. However, that is roughly a fifth of the time in the US’s national journey to reach net zero emissions by 2050, with some policies potentially having lasting impacts.