[Bojo, Battery] Trump 2.0 AMPC Maintains Policy? ... What About Tariffs on Korean Manufacturing Materials?

One Month Before Trump's Inauguration
AMPC Maintained, Electric Vehicle Subsidies Expected to Shrink
US Export Battery Materials Should Remain Tariff-Free

With the inauguration of the Donald Trump administration in the United States just a month away, expectations are growing that the Advanced Manufacturing Production Credit (AMPC), which directly affects the profits of battery companies, will be maintained. However, as the U.S. aims to strengthen its domestic battery material supply chain, there are forecasts that the issue of tariffs on domestically manufactured battery materials must be resolved.

"Trump Likely to Maintain AMPC for Reshoring"

According to industry sources on the 26th, major foreign media outlets such as Bloomberg reported that "Trump's transition team is unlikely to recommend abolishing the AMPC, which is provided for key components produced domestically in the U.S., including electric vehicle batteries," and that "the transition team's recommendations indicate that Trump’s pledge to cut electric vehicle support may materialize as a policy prioritizing domestic manufacturers over consumer incentives." It was also reported that the Trump presidential transition team recommended easing environmental reviews and quickly approving electric vehicle infrastructure. This is interpreted as a move to strengthen the domestic supply chain for batteries and key minerals in the U.S.

President-elect Trump, who will take office in January next year, is negative about subsidies for eco-friendly industries such as electric vehicle purchase incentives and the AMPC. The prevailing expectation was that the Inflation Reduction Act (IRA) would be repealed or scaled back. In particular, revisions to the AMPC would directly affect companies like LG Energy Solution, SK On, and Samsung SDI, which have established multiple production bases in the U.S. Currently, the three Korean battery companies reflect billions of won in AMPC benefits quarterly in their earnings.

Hyunghwa Han, a researcher at Eugene Investment & Securities, said, "(The maintenance of the AMPC) is judged considering that most factories are located in Republican districts and that the Trump administration’s principle is reshoring (returning manufacturing to the home country) as a key policy," adding, "It is expected that the subsidy payment deadline set for 2032 will be shortened to some extent."

Status and Scale of Battery Expansion at the Three Major Battery Manufacturers' North American Plants

"The Issue Is Tariffs"…Must Defend Duty-Free Status Critical to K-Battery Profits

Trump’s trademark tariff policy remains a persistent obstacle. The Korean battery industry has so far shown a structure where raw materials are sourced from China, intermediate materials such as cathode and anode materials are produced mainly in Korea, and finished batteries are manufactured in the U.S. With the Trump administration signaling the application of a general tariff of 10%, tariff measures for Korean battery materials exported to the U.S. are necessary.

Reports have emerged that the new Donald Trump administration is preparing to impose tariffs on secondary battery materials, which could make Korea a primary target of pressure, highlighting the importance of strengthening government-led negotiation power with the U.S.

Major foreign media recently reported, citing internal documents from the transition team, that "imposing tariffs on all battery materials worldwide to encourage domestic production in the U.S., followed by individual negotiations with allies to exempt tariffs, is recommended." The Trump camp believes that using tariffs as a 'whip' instead of incentives as a 'carrot' can attract investment to the U.S. without spending a single cent of national funds and reduce China’s industrial influence domestically.

The three Korean battery companies have started operating large-scale factories capable of producing batteries for millions of electric vehicles in the U.S. Accordingly, exports of battery materials manufactured in Korea to the U.S. have increased significantly. If battery material tariffs become a reality, the Korean battery industry’s 'Korean material manufacturing, U.S. finished product production' structure, actively built in response to the 'IRA order,' will inevitably be affected.

According to UN trade statistics (UN Comtrade) analyzed by the Korea International Trade Association, the U.S. import value of cathode materials, anode materials, and separators increased by 93.1%, from $5.021 billion (approximately 7.33 trillion KRW) in 2020 to $9.698 billion (approximately 14.15 trillion KRW) last year.

An industry insider said, "During the first term of the Trump administration, tariffs were raised first, followed by negotiations with individual countries. In the case of steel, quotas were maintained and tariffs were waived, but since domestically manufactured battery materials have a high market share in the U.S., active trade negotiations are necessary."