The Impact of Tariffs on LED Lighting Costs
Since the start of 2025, tariff uncertainty has roiled international markets, disrupted long-established supply chains, and driven up wholesale and retail LED lighting prices. These sweeping changes have put new pressures on businesses seeking a cost-effective energy efficiency solution, just as many tax credits and related programs are being phased out. Find out how US tariffs have impacted the broader lighting industry and what to expect in the months ahead.
2025 Tariff Rates, At-a-Glance
Announced on April 2, the administration’s tariffs put a sweeping 10% tariff on all imports, with tariffs on imports from China as high as 145%. Not long after, a truce between the US and China reduced the rate to 35%, which remains prohibitively high for most US businesses.
The lack of a coherent tariff strategy means that these tariff levels are uncertain, and many businesses are hesitant to commit to large orders from overseas manufacturers until rates are solidified.
Where Are Most LED Lighting Products Made?
As you’d expect, the vast majority of commercial LED lighting systems are made in China or other Southeast Asia nations. Many of those “China plus one” nations, such as Vietnam and Cambodia, are set to revert to 49% unless a trade deal is reached. Regardless of the brand, nearly every LED lighting product currently sold in the US market will be subject to these elevated tariff rates.
Read More: How Solar Panel Tariffs Affect Businesses
Cost Pass-Through on LED Lighting
In the US, importers typically purchase completed lighting fixtures or raw materials. The importing business pays increased tariffs and are inevitably passed on to consumers. So far, tariffs on LED chips have increased production costs by 10-15%. Other input materials, such as steel and aluminum, are subject to a 25% tariff, which further increases prices.
Tariffs Make Business Planning Challenging
The word of 2025 has been “uncertainty”, and nothing is more difficult to navigate than not knowing what the next three, six, and twelve months might look like.
Rates are changing. Businesses can navigate higher or lower tariff rates by onshoring production or looking for new suppliers. Without established rates, however, they can’t act on those investments.
Procurement is dynamic. Importing companies have had to negotiate and renegotiate recent orders in response to tariff announcements, sometimes while the shipment is en route or after it has already arrived onshore. This has strained relationships and put unexpected financial strain on all parties.
Long-term Forecasts and Expectations
When (or if) tariffs are firmly established, many manufacturers will relocate to nations with lower tariff rates. Mexico has already absorbed a significant share of manufacturing business since the COVID-19 supply chain disruption of 2020-21, although production costs are higher there than in most Southeast Asian countries.
In the meantime, the LED lighting industry and the tens of thousands of small businesses that rely on replacement parts or plan upgrades face some inevitable problems.
Shortages. Many US brands pulled forward inventory in Q1 2025, pushing levels to historic highs. Those stockpiles were at pre-tariff prices, but will likely be exhausted entirely before the end of the year. Expect low availability through Q4 2025.
Higher prices. It’s the inevitable result of tariffs. Whether by 5% or significantly higher, LED lighting prices are expected to rise; upgrading or replacing your system sooner may help mitigate exposure to these pricing pressures.
Your Committed Energy Efficiency Partner
During this time of considerable uncertainty, Keen Technical Solutions is committed ot serving northern Michigan businesses with honest pricing and exceptional service. We’ll provide a detailed and comprehensive assessment of your facility’s energy environment, making cost-effective recommendations to lower your operating costs. Schedule a conversation with a Keen energy consultant today.