A discussion about the potential impact of the Trump tariffs on clean-energy companies, with Chris Kulp, procurement co-lead for the Private Equity Performance Improvement Group, and Julie McLaughlin, managing director and leader of the Clean Energy Practice, of the management consultancy Alvarez & Marsal.

Clean-energy companies — especially those in the solar, wind and storage sectors — are heavily dependent on equipment from China, McLaughlin says. And that leaves them vulnerable to the impact of the additional tariffs on imports from China imposed by the Trump administration.

In response, many clean-energy companies are searching for alternative suppliers, looking to create buyers’ clubs to boost purchasing power, or entering into long-term contracts with manufacturers that have already reshored to the U.S., or are building additional capacity there.

Kulp notes that many companies aren’t aware of the full impact of the tariffs on their businesses. They might claim not to be sourcing anything from China, but their domestic suppliers do, resulting in a 5% to 20% increase in prices from those entities. So gaining a full understanding of their exposure to the tariffs is the first step toward companies mitigating the impact on their supply chains.

On the customer side, there exists the possibility of realigning contracts, pricing and performance targets, McLaughlin says. Many contracts were signed at a time of low interest rates, but now need to be restructured and “rightsized” to reflect current economic realities.

Kulp describes the supply chain as “a three-legged stool,” consisting of supplier, buyer and buyer’s customer. The question is: What share of the higher costs caused by tariffs should be absorbed by those respective entities? If too much of the increase is passed on to end customers, sellers could become less competitive in the marketplace. But by restructuring their cost base, they can lessen the amount that has to shouldered by customers.