South Korean battery companies are closely monitoring the second Donald Trump administration’s potential imposition of tariffs on key battery materials produced in Korea. The concern follows the enforcement of 25 percent duties on Korean steel and aluminum that took effect Wednesday, with additional tariffs expected next month.

While electric vehicle batteries are currently exempt from the proposed tariffs — set to be enforced on April 2 and covering Korean-made automobiles, semiconductors and pharmaceuticals — escalating trade uncertainties under Trump could further challenge Korean battery-makers.

“Domestic companies are preparing for the possibility of tariffs on battery materials, such as cathodes (which are shipped from Korea to the US), given the increasing trade disruptions. The Trump administration mentioned this possibility last year,” said an industry source at the InterBattery Expo, a major battery industry event that took place last week in Seoul.

“They have raised these concerns with the Ministry of Trade, Industry and Energy before the minister’s visit to the US last month for the first ministerial-level meeting,” the source added.

“Most precursors — raw materials for cathodes such as nickel, cobalt and manganese — are imported from China. The US could argue that this amounts to China’s ‘indirect exporting’ and use it as grounds for imposing duties,” the source explained. Notably, cathode materials account for approximately 40 percent of an electric vehicle’s cost.

Kim Tae-hwang, an international trade professor at Myongji University, echoed these concerns, noting that the likelihood of tariffs on battery materials is high. “Many of Trump’s trade policies are essentially ‘veiled measures’ aimed at blocking China’s indirect exports or dumping into the US,” he said.

According to Reuters on Dec. 18, 2024, Trump’s transition team reportedly recommended levying tariffs on all imported battery materials to encourage local production before negotiating exemptions with allies.

If such tariffs are imposed, the entire battery value chain could be disrupted, leading to a loss of price competitiveness for material suppliers and a surge in production costs for cell manufacturers.

Korean battery materials producers — particularly Posco Future M and EcoPro BM — have sought to reduce their reliance on China by building cathode production plants in partnership with General Motors and BlueOval SK, a joint venture between SK On and Ford Motor. However, these efforts face new obstacles following the US' proposed 25 percent tariffs on all imports from Canada, which threaten access to critical minerals from North America.

The potential tariff imposition on battery materials has also reignited concerns over whether Trump might revisit his campaign pledge to abolish the Inflation Reduction Act, which provides a $7,500 consumer subsidy for EV purchases.

Although the IRA prohibits EV batteries from containing raw minerals sourced from a "foreign entity of concern" — such as China — Korean battery-makers, who heavily depend on low-cost precursors and graphite from China, have been granted a two-year grace period on battery material regulations until 2026. However, Trump could refuse to extend this leniency, citing concerns over China’s influence, industry sources warn.

According to data from the Korea International Trade Association, Korea exported $1.7 billion worth of cathode materials to the US in 2024. Under the IRA, cathodes and anodes are classified as essential EV battery materials, allowing Korean-made products to qualify for US tax benefits under the Korea-US Free Trade Agreement.

Experts suggest that while Trump may threaten to scrap the IRA, he is more likely to use it as a bargaining tool in tariff negotiations with Korea rather than following through with a full repeal.

"Scrapping the IRA could cost thousands of jobs and spark a backlash from the public and even within the Republican Party, as many Korean companies operate production facilities in Republican strongholds," said Kim.

“Trump is more likely to reduce tax incentives or demand additional investments, using the IRA as leverage in other negotiations with Korea — such as increasing defense spending, strengthening cooperation in shipbuilding or boosting imports of American pork.”

In January during his first week back in office, Trump issued 26 executive orders, including one titled “Unleashing American Energy,” which immediately paused IRA-related funding designated for accelerating clean energy initiatives in the US.