The Trump administration made the right call when it lifted tariffs on coffee, bananas, and other staples not produced in the United States. Those moves will ease pressure on household budgets at a time when grocery prices remain stubbornly high.
If the goal is to lower costs for American families and strengthen the competitiveness of U.S. businesses, then there is another area where a similar adjustment is urgently needed: electrical equipment that powers the nation’s grid and the data centers fueling the economy and America’s explosive demand for artificial intelligence.
Across the global economy, electricity demand is rising far faster than expected. Manufacturers are investing and expanding in every region of the country. Data centers are multiplying to meet unprecedented computing needs. And utilities are scrambling to modernize a grid that was not built for this level of growth. That build-out requires transformers, switchgear, industrial controls, metals, raw materials, and other components, many of which face supply constraints because domestic capacity, though growing, cannot scale overnight. Every month of delay deepens the economic consequences.
At the same time, electricity prices have climbed faster than overall inflation for more than two years. The drivers vary by region, but one thing is clear: rate pressure is already significant. And unless tariff policy is calibrated for the current moment, it risks adding avoidable costs to the very equipment utilities are racing to procure. Those added costs ultimately show up in monthly electric bills for families, small businesses, and industrial customers.
And the stakes are rising. With summer and winter peak demand increasing faster than new resource additions to an already strained system, grid officials have warned that more regions face elevated risk of capacity shortfalls and associated outages. Ensuring timely access to critical grid equipment is essential to keeping power dependable through the most demanding weather.
This is where tariff policy can be, pro-growth, pro-investment, and firmly aligned with America First principles.
The commonsense principle behind this month’s tariff relief — let’s not tax goods we do not produce domestically — applies equally to critical grid equipment and materials with no short-term U.S. substitute. Targeted and temporary tariff incentives would help stabilize prices, expedite capacity additions, limit reliability risks, and ultimately support President Donald Trump’s broader goals of reshoring supply chains and strengthening U.S. manufacturing.
The National Electrical Manufacturers Association represents the companies that build the backbone of the nation’s power system. Our members are expanding domestic production at a historic pace. But even with billions in new investment, the supply chain cannot be rebuilt overnight, and the U.S. cannot afford delays when electricity needs are rising sharply across the nation.
That is why NEMA has proposed a practical tariff-incentive framework now backed by a coalition of manufacturing, energy, and infrastructure organizations. The goal is straightforward: reward companies that invest in U.S. production, support the build-out of essential power equipment, ensure the grid can keep up with the demands of a modern, AI-driven economy, and keep electricity affordable for Americans. These incentives are earned, not granted. They are time-limited. And they fit squarely within Trump’s approach to fair and strategic trade. There is ample precedent for calibrating tariffs when supply constraints threaten to raise costs for consumers and slow national priorities, automotive and semiconductor inputs among them.
Today’s priority is no different. Without pragmatic incentives, the U.S. risks slowing construction of substations, data centers, and manufacturing facilities that underpin economic growth and competitiveness — and strengthen grid resilience in the face of surging electricity demand. We also risk pushing electricity rates higher at a time when families are already squeezed. A practical tariff structure would help contain those costs while domestic manufacturers continue expanding the production base here at home.
CBO SAYS FOREIGN COMPANIES COULD PICK UP SOME TARIFF COSTS
Tariff relief on coffee and bananas helps at the checkout line. Tariff incentives for critical electrical equipment would do far more than ease household power bill budgets. They would reduce outage risk, lower operating costs for businesses, and accelerate the power expansions needed for data centers, manufacturers, hospitals, and schools. And they send a clear signal to investors that the U.S. intends not just to meet today’s power needs, but to win the future: leading the world in AI, advanced manufacturing, and energy innovation.
The Trump administration deserves credit for taking an important step this month. The next step is to extend the same logic to the heavy lift required to modernize America’s power system. If we want to build here, lead here, and win here, tariff incentives must be part of the solution.
Debra Phillips is the president and CEO of the National Electrical Manufacturers Association.