President Donald Trump’s trade policies have disrupted every sector of the economy, including energy. A nuclear power plant project in Michigan could be the latest victim of the president’s tariffs.
In 2024, the Palisades Nuclear Plant, which was closed in 2022, received a loan guarantee of $1.52 billion from the Energy Department. With an additional $300 million grant from the state of Michigan, Holtec Palisades (which owns the power plant) will restart the plant with two 300 megawatt small modular reactors developed by Hyundai Engineering and Construction.* If brought back online, it would be the first nuclear power plant in the U.S. to restart after being scheduled for decommissioning. Even though it was a favored Biden administration project, the restart has received support from Trump’s Energy Department, which approved a $57 million loan disbursement in March.
Still, the government’s subsidies aren’t shielding the Palisades plant from the impacts of Trump’s protectionist agenda. Bloomberg recently reported that the project’s South Korean construction partner is reconsidering its procurement plans to account for tariffs.*
“We’re carefully considering various options to avoid passing additional costs on to the project owner or US consumers,” Chanho Ahn, director of new energy at Hyundai, told Bloomberg. “As part of this effort, we’re conducting thorough market research to identify US-based manufacturers that offer both competitive pricing and high quality, while closely monitoring the evolving tariff situation.”
Hyundai may have a difficult time finding American manufacturers that can build and supply nuclear power plant components quicker and cheaper than the international market. Like nearly every other sector of the economy, the supply chain for nuclear is globalized and relies on trade. Because the U.S. has little mining and refining and imported uranium is cheaper and more abundant, American nuclear power plants get their fuel from Kazakhstan, Canada, and Russia. Nuclear-grade steel is sourced from abroad, especially from Japan and South Korea. The modules used to house the reactors of Vogtle 3 and 4—the most recent nuclear power plants to come online in the U.S.—are 1,000 tons and made entirely of stainless steel fabricated by Doosan Heavy Industries in South Korea.
While the reactors being built at Palisades are smaller than the Vogtles, the 10 percent global tariffs and 25 percent tax on steel and aluminum are forcing Hyundai to consider less-experienced American manufacturers to avoid paying an additional importer fee. Once the project is done, Holtec can look forward to paying a 10 percent tax to import fuel from Canada, the second largest producer and exporter of uranium in the world (behind Kazakhstan) and the single largest supplier of uranium to the United States.
For now, Hyundai is expecting the project’s cost to rise. “Tariffs will have an influence on the total price,” Ahn told Bloomberg. Whatever the exact impact of the president’s trade policies on the project are, higher prices will likely be paid for by local ratepayers, Michigan residents, and taxpayers nationwide.
*CORRECTION: The article originally misstated Hyundai’s role in the Palisades project and the cost of the restart.
UPDATE: In a statement to Reason, Patrick O’Brien, director of government affairs at Holtec International, said the company has “no concerns” at this time about tariffs but is concerned about the status of existing federal clean energy tax credits “that will be needed for deployment success.”
