“There’ll be a little disturbance,” President Donald Trump cautioned during a recent high-profile speech in Congress when discussing potential near-term impact of his America First trade policy. Indeed, his decisions to announce tariffs on allies and adversaries alike one day and pull them back the next are shaking up the stock market (and erasing any gains since November 2024), muddling the U.S. economic outlook, and pushing down consumer confidence to an eight-month low.
Most Americans now expect inflation to rise and their finances to deteriorate, a far cry from the president’s campaign promise to “make America affordable again.” Globally, intentional uncertainty lies at the core of Trump’s approach to Ukraine, the EU, NATO, Israel, and China — while arguably leaving an opening for Beijing to position itself as guarantor of stability.
Earlier this week, Trump did not rule out a recession as he spoke about a “period of transition” while his aggressive economic policies were coming into effect. Opinion polls indicate a downward trend in public support for his economic performance: Most voters, 56%, disapprove of his handling of the economy, more than at any point during his first term in office. At 31%, Americans are 5 percentage points less likely to say the economy is on the right track than they were in January. At 22%, they are 4 points less likely to say the same about their cost of living.
Among Republican voters, concerns about the cost of living are 6 points higher than they were two months ago, although their support for other Trump policies has grown. Overall, the economy and inflation remain top-of-mind issues for voters (at 82% and 80%), but many believe Trump does not sufficiently prioritize them — which could offer a clue to a 6-point decline in his net job approval since inauguration, which currently stands at 0.2%.
With new tariff announcements coming at a regular clip, industries that broadly support Trump’s tariffs — including steel, aluminum, and lumber — are raising concerns about retaliation from trading partners and potential disruption of global supply chains for products like auto components and construction materials. Detroit’s big three automakers have secured a one-month exemption for USMCA-compliant vehicles and parts, but steel tariffs alone could add up to $800 to the price of mainstream models and 15% to the production cost of some electric vehicle components. Inflationary pressures could in turn lead to reduced consumer demand and slower economic growth — which, coupled with a softening job market, could make a Trump recession a reality.
Recent Trump administration policy and personnel moves are doing little to dispel uncertainty about President Trump’s near-term objectives in China. On the one hand, the administration is ratcheting up pressure with another wave of 10% tariffs (on top of an earlier 10% and other duties imposed by the two prior administrations), investment rules, export restrictions, and port fees.
Trump’s investment policy memorandum aims to block China-affiliated investments in strategic American sectors like critical technology, infrastructure, and minerals, using CFIUS (which scrutinizes foreign investments in the U.S. for national security risks) to enforce these restrictions. The memo outlines provisions for new or expanded curbs on U.S. investment in sensitive technologies in China, including semiconductors, AI, and advanced manufacturing, while fast-tracking investments into the U.S. from America’s allies to get them to reduce their China exposure. Importantly, many of these measures may require an act of Congress to effect durable change — and legislation to curb American investment into sensitive sectors of China’s economy has stalled for the past year. But a review of the U.S. export control system, due April 1, could lead to a further tightening of the restrictions that are already in place.
On the other hand, there are indications that both Washington and Beijing are leaving the door open for talks, possibly in the form of a summit in June between Trump and Chinese leader Xi Jinping. Trump is reportedly looking to revive and expand his 2020 trade agreement with Xi, aiming for a deal that goes beyond adjusting trade dynamics to include some Chinese investment in the U.S. (particularly in clean tech sectors like solar, EVs, and batteries), nuclear security, and cooperation on ending the war in Ukraine. Some aspects of this plan, like strengthening nuclear security, are uncontroversial, but others, like Chinese investments in U.S. manufacturing, are politically divisive and have vocal opponents within Trump’s cabinet, the White House, Congress, and Republican-led state governments. To be sure, the sides first need to improve coordination on U.S. priorities such as fentanyl before preparations for trade talks could begin in earnest. In the meantime, we expect some softening in Trump’s China rhetoric if the Xi summit planning goes ahead — and further tightening of the screws if it does not.
After more than three years of war, the American political establishment’s response to a 30-day, unconditional ceasefire proposed by the Trump team and accepted by Kyiv has been that of “cautious optimism” tempered by doubts about Russia’s willingness to negotiate in good faith. Despite President Trump’s threats of expanded sanctions, his leverage over President Putin is limited. It is unclear if any of the escalatory measures that may be up his sleeve (like banning Russian energy transactions or “arming Ukraine to the teeth”) could persuade Putin to back off his demands that Ukraine give up its territorial integrity and hopes of a NATO membership in exchange for peace. The Russian leader’s notional support for Trump’s “great and correct” ceasefire idea is just the first step in a process that is expected to play out over the coming days, weeks, and possibly months.
Polls conducted since Trump’s Feb. 28 televised confrontation with Ukraine’s President Zelensky show that 44% of Americans disapprove of the way he is handling the war in Ukraine while 41% approve, including 73% of Republican voters. The share of Republicans that sympathize with Ukraine is at 41%, down 18 percentage points from January. (Another 44% sympathize with neither Ukraine nor Russia, and sympathy for Russia is unchanged at 5%.) They are also more likely than not to say the U.S. should push Ukraine to give up some of its territory if that means ending the war, 37% to 34%, marking a notable shift from December when Republicans were more likely to say Ukraine should hold its ground, 39% to 28%. (By contrast, voters overall are as likely to prefer not to push Ukraine to let Russia keep its territory as they were in December, 48% vs. 47%.)
More generally, though, between the nascent peace process in Ukraine and a fragile one in Gaza, polling data points to growing doubts about Trump’s aggressive approach, with net approval of his foreign policy performance down 15 points since January among all voters and down 14 points among Republicans. As the ceasefire talks continue, we will be watching for significant policy developments in Washington, Kyiv, and Moscow — but will not be holding our breath for a quick resolution.
A tense exchange between President Donald Trump and Ukrainian leader Volodymyr Zelensky, and other meetings and statements that preceded it in recent weeks, underscore Trump’s increasing willingness to question, and reject, the existing transatlantic alliance structure in favor of normalization with Russia — evidently deemed more consistent with his administration’s America First foreign policy doctrine.
Trump’s harsh words to Zelensky point to a shift in U.S. policy toward Ukraine from unconditional support to a more transactional approach, making it clear that the speed with which the U.S. extricates itself from its commitments to Kyiv outweighs both the terms of that exit and any damage America’s relationship with its historic allies may sustain as a result. Taken together, Trump’s repeated refusals to offer security guarantees to Ukraine, or a clear pledge of support to NATO allies against a potential Russian threat, suggest a diminished U.S. commitment to European security — leaving European allies to take greater responsibility for their own defense as the Trump administration’s focus shifts to China (aside from issue-specific engagements in the Middle East that could be leveraged to net the U.S. president a Nobel Peace Prize).
For all his promises to end the war in Ukraine quickly and decisively, Trump has offered little clarity on how he would pursue either a ceasefire or an enduring peace agreement, and expressed limited optimism about his chances: “If it doesn’t happen quickly, it may not happen at all.” Following his contentious exchange with Zelensky, further military aid to Kyiv is in serious doubt — but a proposed deal to establish a “reconstruction investment fund,” to be jointly managed by the U.S. and Ukrainian governments, could still be on the table.
More recent versions of the draft agreement have been more favorable to Ukraine, dropping an initial demand of a $500 billion share of its critical minerals and incorporating provisions that would reinforce a sanctions regime against Russia. (Notably, the final draft reportedly included language seeking to prevent Ukraine’s adversaries from benefiting from its reconstruction — potentially including China in addition to Russia.) Regardless, serious questions remain whether a meaningful natural resources deal could be possible without U.S. security guarantees to Ukraine, although Trump clearly thinks European allies should be responsible for Ukraine’s security, and views American companies that would be on the ground exploring for minerals as a security guarantee in itself.
Among many controversial decisions President Trump has made since returning to office, putting Elon Musk in charge of reshaping the U.S. government to suit his political agenda has been one of the most contentious. One month in, Musk’s push to cut costs by pruning federal programs and entire agencies is beginning to raise questions about the government’s future ability to fulfill Trump’s policy objectives and deliver services to a significant portion of the president’s electorate that is reliant on them.
Even though the idea of having a Department of Government Efficiency (DOGE) is broadly popular, Trump’s radical downsizing of the federal bureaucracy has so far resulted in roughly one-third of all legal challengesfiled against his administration. Perhaps more importantly, there has been growing pushback against DOGE, and Musk as its public face, from top administration officials, including Trump loyalists, and conservative lawmakers, including those in safe Republican districts.
Americans generally prefer a smaller government with fewer services, but they are skeptical of Trump’s specific moves to reduce its size and scope. A majority, 53%, disapprove of his attempts to shut down entire federal agencies, and a plurality, 48%, say he has gone too far in changing the way the government works. Fifty-five percent think that Musk, who has no formal role at DOGE, holds too much decision-making power, and 54% are critical of the prominent part he plays in the Trump administration.
Crucially, only 31% of voters say government reform should be Trump’s top priority — while 62%, including 47% of Republicans, believe he has not done enough to reduce inflation, which remains a major concern. This discrepancy suggests a mismatch in priorities that could put pressure on Republican lawmakers in districts that are highly dependent on federal jobs, services, or benefits, potentially hampering the implementation of Trump’s larger agenda in a closely divided Congress.
At this point, opposition to Trump comes mainly from Democrats. Just 16% of Republicans oppose shutting down government agencies, and 12% say Republicans in Congress are doing too much to back the president’s agenda. Greater risks to Trump’s party could come from potential cuts to federal health spending to pay for the extension of his first-term tax cuts, or a surge in inflation that 53% of Republicans expect to result from his tariffs. Time will tell whether any provisions in Trump’s package of tax and spending cuts, which is currently taking shape — and which aims to permanently reduce the U.S. government’s size and reach — can reverse a steady erosion in the president’s net approval rating since his inauguration, or ease a growing sense of pessimism and fear across the political spectrum about what the rest of his term might bring.
As congressional Republicans search for savings to fund the extension of President Trump’s 2017 tax cuts that would otherwise expire in December, some clean energy tax credits under the Inflation Reduction Act (IRA) appear safer than others. The U.S. Senate budget resolution, passed February 20, includes instructions for unspecified spending cuts but does not delve into tax issues. The U.S. House resolution, approved February 25, leaves IRA tax credits in place, ostensibly because a lion’s share of IRA spending on clean energy manufacturing has gone to Republican congressional districts. But once House Republicans start looking for specific programs to offset as much as $2 trillion in proposed spending cuts, or later, once the House and Senate Republicans begin work on a joint budget reconciliation package, electric vehicle consumer tax credits are virtually certain to come into play — although any savings from their elimination will do very little to help avert potential cuts to public health programs like Medicaid.
In the meantime, two Republican bills in the Senate, one of them cosponsored by Senate Majority Leader John Thune, seek to end the consumer tax credit for purchased and leased EVs, eliminate federal incentives for EV charging infrastructure, and impose a new $1,000 tax on EVs to pay for road repairs. In the House, there is a similar proposal from Budget Committee Chair Jodey Arrington, who led the development and passage of the House budget resolution and will be instrumental in ensuring that President Trump’s fiscal agenda is advanced through the reconciliation process. While these are messaging bills unlikely to pass in their current form, they make it clear that the pressure on EV tax credits is on. Based on the current timeline, the budget reconciliation package is not expected to be ready until May at the earliest, and we will be watching developments in this space.
Three weeks into his second term, President Donald Trump’s “flood the zone” approach to remaking the United States government in an America First image is upending the prevailing Western notions of the Ukraine peace process, freeing multinational firms to engage in corrupt business practices, and leaving a vacuum for adversaries to expand their global influence after USAID, the world’s top provider of foreign aid, is shut down.
Trump’s foreign policy team — a mix of national security hawks like Marco Rubio (Secretary of State) alongside America First proponents like Pete Hegseth (Secretary of Defense) and Tulsi Gabbard (Director of National Intelligence) — represents competing policy approaches, positioning the president as the ultimate decision-maker willing to bypass traditional checks and balances to implement his vision of America’s global role.
Many of Trump’s executive actions lack power to change policy without additional action from Congress. The Republican majority in both houses largely supports his efforts to streamline the federal bureaucracy — carried out by Elon Musk’s team at DOGE (Department of Government Efficiency) — and shows limited resistance to his moves to freeze or redirect congressionally approved funding. The Democratic minority has struggled to formulate a coherent counterstrategy but appears reluctant to use the March 14 government funding deadline as leverage.
Instead, the courts have stepped in to check and balance Trump’s attempts to test the limits of executive power, blocking some of his early priorities, such as freezing foreign aid funding and firing the USAID workforce, which are now headed to the right-leaning Supreme Court. It is unclear how many of Trump’s initiatives will ultimately be reinstated by the courts, and how America’s global standing may change as a result.
Trump supporters argue that by injecting chaos and uncertainty into policymaking, the president is achieving results, whether cutting government waste or reducing China’s willingness to escalate tensions over Taiwan. His strategy is resonating with voters, 70% of whom say he is fulfilling his campaign promises and 53% approve of his job performance. Now they would like Trump to focus more on reducing consumer prices (66%) and less on imposing tariffs (49%) or cutting foreign aid (39%). Time will tell if declining expectations of financial wellbeing and affordable groceries under Trump (both measures are down from January, by 7 and 11 percentage points) are a sign of Americans’ growing weariness with all that chaos — and of their desire for Trump to start paying closer attention to the pocketbook issues he promised to fix.
The U.S. Department of Transportation suspended a $5 billion National Electric Vehicle Infrastructure (NEVI) program to build fast EV chargers along designated routes, approved as part of the 2021 infrastructure law. Of the original amount, $3.3 billion has been allocated to states that administer the program, but just $616 million has been awarded to companies to actually build charging stations. All approved but unspent funds are under review, with proposed changes expected in the spring. It is unclear whether the Trump administration can cancel pre-approved projects or halt spending of funds appropriated by Congress, so legal challenges are likely. But since last week, most states that had NEVI projects underway have paused them, with a possible exception of Maryland still reportedly moving ahead with “obligated” projects.
Billed as a way to realign federal spending with the new administration’s priorities, the move risks damaging public confidence in EVs by amplifying range concerns, a leading deterrent to EV ownership. If NEVI is suspended indefinitely, the funding freeze would impact mostly smaller players in the charging space, while Tesla, one of the largest recipients of NEVI funding, is unlikely to be seriously affected. Charger construction in low-income and rural areas could draw to a standstill, while more profitable locations would be covered by private efforts like Ionna, a joint venture of eight automakers (including Ford, Toyota and Mercedes-Benz) with plans to deploy 1,000 fast-charging points nationwide by 2026. If NEVI is eventually revived with reduced funding, a new study from Carnegie Mellon University suggests that making the Tesla charging network universally accessible could achieve a similar EV charging footprint with 500 fewer stations and as much as $332 million in savings.
Chris Wright, a fossil-fuels executive turned President Trump’s Energy Secretary, has called terms like clean energy “deceptive” and argued that net-zero policies raise consumer energy costs and undermine U.S. national security. Now Wright and John Sneed, the new head of the Energy Department’s Loan Program Office who held the same position during the first Trump term, are spearheading an overhaul of the $412 billion program authorized under the Inflation Reduction Act to support a variety of clean energy technologies, including EVs, components, and advanced batteries. The program has awarded approximately $35 billion in loans and loan guarantees to bolster EV manufacturing, with some awards finalized just days before President Joe Biden left office, including a $6.6 billion loan to Rivian to build a new EV plant in Georgia.
Since Trump’s return to the White House the loan office’s work has largely stopped while its operations are being retooled to focus on the technologies favored by the new administration, such as nuclear power and liquefied natural gas. Trump officials are exploring ways to cancel existing financing deals, including conditional loans worth a total of $47 billion across all programs that have not been finalized, and use the freed-up funds, plus more than $200 billion in uncommitted funding, to advance the president’s priorities. There is general consensus that loan agreements finalized under Biden are relatively safe, although recipients should brace for delayed disbursements and lengthy court proceedings if the administration does try to claw back the funds. Conditional awards face bigger risks because they may require further approvals from the Treasury Department or the Office of Management and Budget, where they may be blocked or stalled beyond their two-year loan guarantee expiration deadline. We are watching further developments in this space — including any pushback from Republicans in Congress, whose districts account for 80% of manufacturing investments spurred by Biden’s climate law, or automakers like Ford, whose CEO Jim Farley recently warned of widespread layoffs if the Trump administration ended financial support for EV manufacturing.
In his first days in office, President Donald Trump declared a state of emergency on America’s southern border and in its energy supply, reversed environmental protections, fired government watchdogs, pulled out (again) of the Paris climate agreement and the World Health Organization, paused foreign aid spending, threatened tariffs on goods from half a dozen countries (not counting the European Union), and announced a $500 billion AI infrastructure project.
It is too early to tell which of Trump’s moves will have a lasting impact, which are purely symbolic, and which will be curtailed or reversed by Congress or the courts. The president’s early actions hew closely to his campaign pledges, and Americans largely expect him to follow through. Notably, the U.S. public appears more in alignment with his America First agenda than at any time during his first term — while remaining profoundly divided on Trump himself, 47% favorable to 48% unfavorable.
Polls show popular support for many of Trump’s signature policies, although not necessarily for his proposed means to carry them out. There is solid backing for strengthening border security, deporting violent criminals, or sending U.S. troops to the southern border, but less so for targeting undocumented immigrants in schools and churches or ending birthright citizenship. There is a clear desire to prioritize domestic issues over global concerns, shared by 60% of Americans, but broad opposition to using coercion to take control of Greenland(68%), Canada (67%), or the Panama Canal (57%).
Support for Trump’s tariff plans is more muted, with less than half in favor, most people expecting prices to rise, and just 37% hopeful that his economic plans would help their personal finances. His decision to pardon participants in the January 6, 2021 attack on the U.S. Capitol is unpopular with virtually any demographic, including 24% of Republicans, over concerns that it could incite further violence.
Trump begins his second term on stronger footing than he did in 2017, but most Americans do not view his victory as a clear, broad political mandate and are more likely to think it was a rejection of the unpopular Biden presidency rather than an endorsement of Trump. His early actions as disruptor-in-chief have left some voters unimpressed, pushing his net approval rating down 9 percentage points since inauguration. People want Trump to focus on bringing down consumer costs — the issue that arguably got him elected — instead of imposing tariffs on trading partners or expanding the U.S. territory. Softening consumer confidence and the U.S. Federal Reserve’s decision to hold interest rates steady for the time being indicate that he may find it challenging to follow through on this all-important promise.
President Trump’s softer tone toward China was one of relatively few surprises of his first week in office. It took Trump until day two to threaten China with a 10% tariff as punishment for sending fentanyl to the U.S. via Mexico and Canada, far below 60% he promised on the campaign trail. Instead, he ordered a broad review of China’s trade practices and another of its compliance with a phase-one trade agreement signed under the first Trump administration — leaving himself a months-long window to negotiate an expanded version of that dealbefore ratcheting up the pressure.
Trump delayed a ban on TikTok for 75 days and suggested that China tariffs could hinge on a deal splitting the ownership of the app between its Chinese parent company, ByteDance, and a U.S. government-owned entity backed by Microsoft, Oracle, Perplexity AI, or another American tech company. He has kept his plans regarding Taiwan deliberately vague after suggesting that it ramp up its defense budget to 10% of GDP or pay the U.S. for protection from Beijing, positioning the issue as a possible bargaining chip in any future China talks.
If personnel is policy, divergent views among senior members of Trump’s China team underscore the president’s transactional, personality-driven approach to the bilateral relationship – in contrast with his predecessor’s framing of it as an ideological contest between democracy and autocracy. Secretary of StateMarco Rubio is a China hardliner twice sanctioned by the Chinese government for his criticism of its human rights record. CIA director John Ratcliffe, another China hawk, believes Covid originated from a Wuhan research lab leak, a theory China strongly rejects. But others, like Commerce Secretary nominee Howard Lutnick and Elon Musk, head of the nascent Department of Government Efficiency, may be more inclined to negotiate with China, using tariff policy as leverage (a view shared by Treasury Secretary Scott Bessent).
Still, Trump views himself as the ultimate decision maker on China, and it will be up to him to decide whether to pursue an economic deal with Beijing that advances America’s interests or adopt an aggressive decoupling agenda by means of new tariffs, sanctions, or other kinds of economic and political pressure. We will be watching to see whether Trump’s Colombia playbook resonates with Beijing, leading to tangible steps to expand imports or otherwise address China’s record-high trade surplus with the U.S.
Since returning to office, President Trump has taken methodical action to rein in the “green new deal” — his term for former President Biden’s clean energy programs, including those encouraging adoption of zero-emissions vehicles — and eliminate his predecessor’s so-called electric vehicle mandate.
He signed an executive order revoking Biden’s non-binding target of 50% electric vehicle sales by 2030, halted unspent government funds for electric vehicle charging stations, paused new Energy Department grants and loans (presumably including conditional awards to manufacturers under the Inflation Reduction Act), called for ending state emissions waivers (particularly targeting California’s ability to ban internal combustion vehicles by 2035), and directed his administration to consider eliminating clean vehicle subsidies, including the $7,500 federal tax credit for purchases of electric cars.
Trump’s newly confirmed Transportation Secretary, Sean Duffy, has since launched the rollback of Biden-era fuel economy standards for cars and light trucks, while the Environmental Protection Agency, now run by a team of fossil fuels lobbyists, is reassessing its ability to grant California its customary waiver to set more stringent tailpipe emissions limits, last renewed by Biden before leaving office.
These measures are Trump’s known knowns, communicated extensively on the campaign trail and throughout the presidential transition. Then there are his known unknowns, actions that align with his core beliefs and priorities but are difficult to predict in terms of timing, scope, and impact. His administration’s recent order to freeze federal spending in several areas, including climate, targeted billions of dollars in clean vehicle and advanced manufacturing tax credits and grants (including about 16% of clean energy IRA grants not yet obligated) before it was rescinded following confusion and legal challenges. The administration has since indicated that Trump’s intention to freeze spending in those areas remains in effect. We expect any unspent clean energy funding not targeted otherwise to remain vulnerable to cost cutting under Russell Vought, Trump’s nominee to head the White House budget office, an electric vehicle critic who has expressed intentions to defund the EPA. We are on the lookout for additional Trump actions in this space and will keep you informed of further developments.
Days from now, President-elect Donald Trump will begin his second term in the White House backed by a largely loyal, Republican-held Congress, big business pivoting to align with MAGA priorities, donors on pace to give $500 million to support his agenda, and a vastly empowered MAGA-friendly media and information ecosystem. Despite a historically small Republican margin in the U.S. House of Representatives, quite a few House and Senate Democrats appear open to working with him on the issues that won him the presidency, such as border security, public safety, the economy, and the efforts to cut wasteful government spending. A diverse group of Democrats, from centrist and swing-state lawmakers to those farther off to the left, voted last week to pass an immigration enforcement bill, reflecting pragmatic considerations on the ground amid the Democratic Party’s efforts to recapture voters’ trust and refocus its messaging ahead of next year’s midterm elections.
Trump’s early priorities include releasing as many as 100 executive orders on his first day in office, encompassing immigration, border security, trade, energy, and rollbacks of some of President Joe Biden’s landmark policies related to greenhouse gas emissions and electric vehicles. That will be followed by a sprint to fill key administration posts, fund the government for the rest of FY2025, raise the federal debt limit, and put together one or two massive packages of border, energy, and tax provisions, expected to be passed with Republican-only votes in the coming months. On a foreign policy front, Trump now promises to end the war in Ukraine within six months of taking office (rather than within 24 hours) while claiming credit for a nascent Gaza ceasefire deal negotiated on Biden’s watch. The details of Trump’s proposed tariff offensive against China, Mexico, Canada, and other trading partners are still being worked out (more on that below) and will likely remain in flux as governments around the world maneuver to limit potential damage to their economies or political standing.
Trump supporters have long argued that the president-elect should be taken seriously but not literally. Polling shows Trump in a stronger political position now than at the start of his first term, although few of his priorities seem to match those of U.S. voters, who want him to focus on economic issues (at 47%) over deporting immigrants (21%) or imposing tariffs on foreign goods (2%). Clearly, many Americans are willing to give Trump the benefit of the doubt — but time will tell if more of them come to embrace some of the most divisive elements of his agenda, such as investigating his political opponents or pardoning participants of the January 6, 2021 attack on the U.S. Capitol.
During his presidential campaign, Donald Trump floated minimum tariffs of 10% to 20% on all imported goods, and 60% or higher on shipments from China. Whether he still stands by those targets, and just how aggressively he is planning to pursue them, remains less clear. Latest reports point to a tension between a desire to “go big” with duties on a broad range of countries and categories of goods, and a surgical approach envisioning gradual tariff increases or covering only those sectors deemed critical to U.S. national or economic security.
To maximize disruption, Trump could tap the International Economic Emergency Powers Act (IEEPA), which authorizes a president to manage imports during a national emergency, to unleash blanket tariffs on allies and adversaries alike without having to justify them on national security grounds. In 2019, he used the IEEPA to threaten tariffs on Mexican imports to get Mexico to reduce the number of undocumented migrants crossing the border with the U.S. He could reprise this tactic, threatening Mexico and Canada with 25% tariffs and China with an additional 10% tariff, perhaps ramped up in 2% to 5% monthly increments, until they act to reduce migration and drug trafficking.
In a more targeted approach, Trump could expand the use of Section 301 or Section 232 tariffs on critical imports, which could include goods in the defense industrial supply chain, critical medical supplies, and clean energy imports like batteries, rare earth minerals, and solar panels. (A Trump transition team document previously recommended imposing tariffs on all battery materials globally in a bid to boost U.S. production, and then negotiating individual exemptions with allies.) If implemented, such an approach could limit business uncertainty and allow for corporate exemptions but still raise consumer prices and cause trade partners to retaliate, as China did against the tariffs imposed both by Trump and President Biden since 2018. We are watching Canada and Mexico, the U.S.’s closest trading partners, calibrate their approach in response to Trump’s negotiating tactics, one day threatening to reciprocate his tariffs and the next offering to buy more American and fewer Chinese goods or stepping up efforts to curb U.S.-bound flows or drugs and migrants.
Biden administration officials are betting that some of President Biden’s latest actions on clean technology could survive the Trump presidency. Among those are the new, technology-neutral 45Y and 48E clean electricity tax credits introduced as part of the Inflation Reduction Act (IRA) and projected to do more than any other IRA provision to reduce America’s carbon emissions. The new tax credits follow a basic formula that has long applied to wind and solar projects and extend it to a wider range of clean energy sources, including geothermal, nuclear, advanced batteries, and certain kinds of biofuels. Some, like nuclear and geothermal, have the support of Chris Wright, President-elect Trump’s nominee to lead the Department of Energy, and congressional Republicans who advocate ending the incentives for technologies like wind and solar. The way the law is written, no single technology can be excluded from the tax credits, making them relatively safe from Republican attempts to cut federal spending on clean energy transition.
Another recent Biden move allocates $635 million in grants to build out EV charging and other clean transportation infrastructure across 27 U.S. states and the District of Columbia. The funding is part of the $7.5 billion made available for this purpose under the 2021 bipartisan infrastructure law. Despite a slow rollout, much of the funding has been formally committed to specific projects, likely putting it out of reach of the incoming Trump administration (especially considering special budgetary guardrails written into the law). That being said, Trump could redirect some of the remaining funds to other alternative refueling technologies, such as hydrogen and propane, which are also covered under the program.
Since last month’s election, President Joe Biden has kept a relatively low profile while President-elect Donald Trump has increasingly acted as if he were already in office, meeting with foreign leaders, dictating trade and immigration policy, and moving quickly to put his stamp on government institutions through controversial nominees to top posts in his incoming administration.
Trump’s favorability stands at 41%, down 10 percentage points from his 2016 presidential transition, but more Americans expect positive change now than eight years ago. Wall Street holds a largely positive view of Trump’s agenda, and more voters, 39%, express “a lot” of confidence in his ability to manage the economy than they did in any U.S. president in the last fifty years, including Barack Obama (37%), George W. Bush (29%), and Ronald Reagan (26%) during their transitions.
As he takes the reins of a largely healthy economy he inherited from Biden, Trump is poised to take credit for positive economic impacts of Biden-era infrastructure and manufacturing projects as they go from blueprints to reality over the next four years — provided they move forward unimpeded.
Behind the scenes, Biden officials and leading Democrats in Congress are putting finishing touches on some of this administration’s biggest priorities. Department of Energy officials are working to finalize billions of dollars in loans to clean energy projects, many of them in Republican congressional districts, that could be delayed or cancelled by the Trump administration that already promised to redirect any unspent funds under the Inflation Reduction Act. New restrictions on oil and gas drilling in the U.S.’s largest wildlife refuge and a newly released report on the environmental impacts of increasing LNG exports are expected to slow down future efforts to expand domestic fossil fuel production. As of this writing, the Senate has confirmed 233 Biden-nominated federal judges that could shape the judiciary for decades, reaching parity with Trump’s record level of judicial appointments at this point in his first term.
In recent days, Biden has been more vocal about what he wants his legacy to be, pointing out weak spots in Trump’s economic record and criticizing his plans for tariffs as disproportionally impacting working and middle-class Americans. Trump himself has admitted that tariffs might not actually lower consumer prices. Time will tell how long Trump’s honeymoon phase will last once he begins to govern and voters tune in to some of his more controversial policies and administration picks. As for Biden, history may judge his record more kindly than the 37% approval rating suggested by the current polling average.
President-elect Trump plans to impose sweeping tariffs on all imports from China, including some categories of goods coming via third countries, like made-in-Mexico Chinese-brand cars. His nominees for key administration posts, such as Sen. Marco Rubio for Secretary of State and Rep. Mike Waltz for national security adviser, have a strong track record as China critics and supporters of a more robust defense posture to counter Beijing’s perceived national security threat. His pick for ambassador to China, David Perdue, has criticized Trump’s previous wave of tariffs as overly broad but now views Beijing as an enemy set to “destroy capitalism and democracy.”
Others, such as Scott Bessent, Treasury Secretary nominee who has described proposed tariffs as a “maximalist negotiating position,” and Howard Lutnick, whose role as Commerce Secretary would put him in charge of enacting Trump’s tariff and trade agenda, hold more nuanced views, indicating an effort on Trump’s part to balance the hardliners with more pro-business voices — regardless of conflicts of interest that could result from Lutnick’s extensive business ties to China.
The presence of both Rubio and Bessent on Trump’s team recalls divisions between China aides and advisers in his first administration, some of whom wanted to contain and confront China while others pushed to maintain and expand commercial ties. This time around, there are differences between Rubio and Waltz, vocal supporters of Taiwan, and Trump, who has suggested that the island should pay the U.S. for its defense. There are also differences around the future of TikTok (set to be banned in the U.S. from Jan. 19, 2025), which Trump promised to “save” against the wishes of his appointees like Jacob Helberg, the State Department’s incoming top economic policy and trade official.
Trump’s recent suggestion that Beijing and Washington could “together solve all the problems in the world” points to a tension between the president-elect’s aggressive approach on trade that is being shaped by Lutnick and Jamieson Greer, his nominee for the U.S. Trade Representative, and his openness to using tariffs as a bargaining chip toward non-trade objectives, such as curbing the inflow of Chinese fentanyl. This tension between Trump the America First trade warrior and Trump the dealmaker is one that is likely to define U.S.-China relations in the next four years because, if his first term is any indication, the president-elect will be Washington’s ultimate decision maker on China.
By all accounts, President Biden’s subsidies for consumer electric vehicle purchases and EV charging stations appear poised for termination once President-elect Trump is sworn into office. The Trump transition team is putting together plans to cut spending in those areas and redirect any unspent funds to national defense priorities, including securing China-free supplies of batteries and critical minerals and boosting domestic minerals processing and battery production. (The plans also include rolling back emissions and fuel economy standards to 2019 levels and blocking California’s right to set its own emissions rules, which the Biden administration renewed just days ago.) An acknowledgment of the value of battery production for national security could help assuage concerns among mostly Republican lawmakers who would otherwise risk their constituents’ ire over lost investments and missed opportunities for economic development. An official announcement putting these plans in motion could come as early as day one of the second Trump term, although congressional action to repeal the tax credits will likely take months.
With a slim majority in both houses of Congress, the Republicans will begin the next term balancing several priorities, such as funding the federal government for the rest of the year, extending Trump’s signature 2017 tax cuts (which would otherwise expire at the end of 2025), and enacting the president-elect’s expansive border security and energy agenda. It may take Republican leaders several months to craft a bill that would pay for the extended tax cuts by eliminating EV subsidies and cutting costs in a myriad other ways, and pass it with Republican-only votes using the budget reconciliation process, which requires a simple majority in both houses. By the time the bill passes Congress and is signed into law, likely in late 2025, Trump’s Treasury Department could also push to amend existing regulations to make it harder to claim the EV tax credits, tightening the rules on the sourcing of materials from China or adding new, onerous procedures for consumers claiming the credits. We will be watching auto manufacturers and other affected entities lobby Congress and the incoming administration on EV tax breaks and related incentives as the debate over the tax legislation plays out in the new year.
