China Wields Battery Power in Renewed Trade Pressure on the U.S.

China’s latest export restrictions on batteries are expected to have significant implications for U.S. companies, analysts warn, as Beijing leverages its dominance in the global battery supply chain to strengthen its position in ongoing trade tensions with Washington. The new measures, effective November 8, cover a wide range of technologies — including large-scale lithium-ion batteries, cathode and anode materials, and battery production equipment — all areas where China holds a commanding lead.

Under the new rules, battery exporters must obtain licenses from the Ministry of Commerce, a system that gives Beijing the flexibility to selectively restrict shipments. According to BloombergNEF analyst Matthew Hales, while the controls target fewer sectors than previous export curbs, their potential impact is severe given China’s overwhelming presence in battery manufacturing. In the first seven months of 2025, Chinese grid-scale lithium-ion batteries made up roughly 65% of U.S. imports, suggesting that the new restrictions could be felt almost immediately across the American energy sector.

The move comes as the U.S. faces surging energy demand, driven in part by the rapid expansion of AI data centers, whose electricity use has more than doubled since 2017 and is projected to triple by 2028, according to the Lawrence Berkeley National Laboratory. Large-scale battery storage systems are vital to managing this growth, helping balance renewable energy output and prevent blackouts. The U.S. has installed about 26 gigawatts of utility-scale battery capacity as of 2024, with an additional 136 gigawatts expected within the next decade — much of which currently depends on Chinese components.

Despite efforts to boost domestic production, the U.S. remains heavily dependent on China, which controls 96% of global anode and 85% of cathode manufacturing capacity, according to BNEF. Experts describe the inclusion of these materials in the export restrictions as a major escalation, given how essential they are to global battery production. “This will hit nearly every U.S. battery plant — these are their core raw materials,” said Celina Mikolajczak, a former Tesla and Panasonic battery executive. Shares of Fluence Energy and Tesla fell sharply following the announcement, dropping 12% and 5%, respectively.

Industry leaders say the new policy adds further strain to an already fragile global supply chain. Dragonfly Energy CEO Denis Phares emphasized the need to accelerate domestic innovation and diversify supply sources, noting his company is actively working to reduce reliance on Chinese components.

However, the move could also backfire on China, whose domestic battery sector faces overcapacity and growing reliance on exports. Analysts at Benchmark Mineral Intelligence argue it remains uncertain how strictly Beijing will enforce these new restrictions, given the risk of hurting its own industry. Still, the decision is widely seen as both a strategic bargaining tool in trade talks with the U.S. and a way for China to preserve its technological edge in the global clean energy race.