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.
