NEMA Proposes Tariff Incentives to Boost U.S. Manufacturing and Energy Infrastructure

The National Electrical Manufacturers Association (NEMA), joined by associations representing data center operators and the electrical industry, has released a tariff incentive proposal aimed at aligning trade policy with U.S. energy, manufacturing, and infrastructure priorities.

The proposal comes as U.S. manufacturers face rising demand for electricity, industrial capacity, and data centers, and after investing more than $185 billion in domestic production since 2018. Industry groups warn that without targeted, time-limited tariff measures, those investments could be disrupted, affecting supply chains and cost stability.

NEMA’s framework outlines three incentive areas:

• Capital Investment in U.S. Manufacturing: A tariff offset equal to capital investments made to build or expand a domestic facility, available for up to three years after the facility becomes operational.

• Grid Infrastructure Incentive: A tariff offset for goods or raw materials used in power infrastructure projects, including substations, on-site generation, distribution equipment, and data centers.

• Domestic Manufacturing Incentive: A tariff offset for manufactured goods that meet federal domestic content requirements.

According to NEMA, U.S. energy demand is projected to grow 50% by 2050. Electrical manufacturers have invested more than $10 billion since 2021 in new technologies to expand grid and manufacturing capacity, while reducing reliance on materials from China by 32% since 2018.

Several industry organizations voiced support for the proposal.

Data Center Coalition President Josh Levi noted that data center companies are investing heavily in U.S. digital infrastructure and said tariff certainty could help overcome supply chain challenges.

National Electrical Contractors Association (NECA) CEO David Long said the framework would align tariff policy with domestic investment and energy priorities, helping contractors deliver projects on time and on budget.

National Association of Electrical Distributors (NAED) President and CEO Wes Smith said the plan would support continued supply of materials essential to powering data centers and daily energy needs.

National Electrical Manufacturers Representatives Association (NEMRA) President and CEO James Johnson called the framework a practical approach to realigning trade policy with national priorities in energy independence, manufacturing, and AI infrastructure.

The proposal was released as part of a joint initiative among the groups, which say it is intended to strengthen domestic supply chains, encourage investment, and support the buildout of U.S. energy and grid infrastructure.