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Your Guide to What Trump’s Second Season Means Washington, Business and World
At least the Soviet Union produced only the “Sputnik moment” in 1957 when its orbiting satellite launch managed galvanized shocks to US scientific and defense facilities. China, the current superpower rival of the US, has regularly argued for them, and the launch of Deepseek AI’s leading language model is one of several. But with a range of green technologies, especially batteries and electric vehicles, the US appears to be happy to shrug and get China to win.
Joe Biden’s green expenditure under the Inflation Reduction Act (IRA) which expanded federal spending and tax credits on technologies such as hydrogen, solar, wind power, and clean fuel production had two targets. One was to re-elect Biden by creating jobs. The second was to challenge China’s hegemony and establish US autonomy with green technology. It fails first, and the second first benefit is in serious danger.
By creating jobs in states and congressional districts that vote for Republicans, the IRA was designed to withstand Trump, jumping on investment in sectors like batteries and electric vehicles. But in reality, ideology is currently beating economic pragmatism, but there are few environmental principles in the game as well.
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Green expenditure is currently bouncing around Capitol Hill on Donald Trump’s “one big beautiful bill.” The House wanted the end of the Clean Energy tax credit. The Senate wants to keep them for everything except wind and solar. There are also potential tows in the form of clauses that reject any kind of tax credits to companies that have Chinese components in their supply chains.
Whatever it ultimately appears, it is clear that there are few friends in the White House with tax credits to buy EVs. Republicans often say they don’t need to subsidize because only coastal elites buy them. We EVs are selling at high prices, and there are some truths in them. The costlyness of insisting on producing goods from home is a longstanding weakness in the US green transition. Protecting domestic industries with tariffs may be politically necessary to subsidize or sell products such as solar panels, but it is clearly a constraint on adopting them.
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Many in Congress hate China and hate EVs more than they like technological advances. In pure conduct, the Senate recently attempted to stop the US postal service from using new, cutting-edge electric delivery trucks. This is a technically unsuccessful move.
The US record of wasteful green technology leads is now embarrassing. Scientists at the University of Texas invented the lithium-iron-phosphate battery, which is becoming the standard for EVS in 1996, but the US has regained its commercial advantage over Chinese companies supported by luxury state subsidies. Elon Musk’s Tesla got off to a big start with EVS, but until very recently Musk actually opposed the US tax credit. He preferred to consolidate his position in the US market.
With the exception of Tesla, Rich Country car companies saw the EV revolution coming and reached it before it, like China. But at least European producers like Volkswagen have tried their best to keep up with the help of official subsidies combined with temporary and coordinated EU anti-supply obligations on imports. In contrast, indigenous manufacturers who have been digging into the tariffs on the 25% pickup trucks behind the US for decades have clearly forgotten how to innovate outside that part of the market.
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Detroit was slow to expand production and develop budget models despite being protected by (or therefore) by Biden’s 100% tariffs on EVs. The US EV market remains much smaller than the EU market, let alone China. This means selling more EVs than the US has put together. In the meantime, tariff uncertainty has put many battery and EV production on hold. A repeated Princeton University project, which assesses federal energy and climate policy, says withdrawing credits will create a major overpower in the US battery and EV market.
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If we had to design examples of how political and economic pathology work together among policymakers, the decision to give up support for green transitions, especially EVs and batteries, would be great if we weakened the US from within. Climate change denials, perceived elites, Chinese unnuanced aversion, and heartless prejudice against reliance on protectionism wastes its technical advantages.
Sputnik’s satellites fired our enthusiasm for scientific advancement. Twelve years later, Americans were walking the moon. If Trump and the current Congress were in charge at the time, they would probably have decided to have the Soviets do space exploration and instead focus on building a large vehicle with jumbo jets and fins.
As long as Trump is in the White House and Republicans are occupying both Congressional homes, it’s hard to see how trends from Green Tech will reverse. It’s an incredibly unique goal, rivaling the Brexit of self-destructive stupidity, and its impact will echo for years to come.
alan.beattie@ft.com
