A manufacturing renaissance
The renaissance in American manufacturing is perhaps best illustrated by the auto sector. In 2019, two gigafactories—facilities capable of producing more than 1 gigawatt-hour of battery or clean energy generation capacity per year—existed in the United States. Then, in 2021 and 2022, Congress passed the IIJA and the IRA. These two laws provided significant support for the development of batteries and other clean energy technology in the United States, notably with significant requirements for the onshoring of clean technology supply chains.
The surge of private investment, spurred by the clean energy investment agenda, propelled the U.S. electric vehicle industry into the top spot for total investment in the world in 2024 on a per-country basis, bypassing China.
By the end of 2023, there were 34 gigafactories planned, under construction, or operational in the United States, representing part of an unprecedented $101 billion in private clean manufacturing investment built upon federal incentives from the IIJA and the IRA. These facilities include Hyundai and LG Energy Solution’s $4.3 billion electric vehicle (EV) battery plant in Bryan County, Georgia, and Redwood Materials’ $3.5 billion battery recycling facility in Dorchester County, South Carolina—both of which benefit from the IRA’s 45X advanced manufacturing production tax credit. This tax credit creates thousands of job opportunities across local communities and capitalizes on the domestic EV manufacturing renaissance kicked off by the IIJA and IRA. The surge of private investment, spurred by the clean energy investment agenda, propelled the U.S. EV industry into the top spot for total investment in the world in 2024 on a per-country basis, bypassing China.
The Trump administration’s funding freeze
After taking office on January 20, 2025, President Donald Trump signed Executive Order (EO) 14154, a pledge to restore American energy dominance, despite the fact that the United States has led oil and gas production worldwide since 2018 and 2011, respectively. Included in the order were directives for agencies to immediately “pause the disbursement of funds through the Inflation Reduction Act of 2022 (Public Law 117–169) or the Infrastructure Investment and Jobs Act (Public Law 117–58).”
The funding pause described in this order is unconstitutional and illegal—violating the take care clause of the Constitution and breaking appropriations law, authorization law, and the Impoundment Control Act of 1974, while undermining the separation of powers between Congress and the presidency. In the days and weeks since the order was issued, multiple federal judges have ordered the administration to halt the funding freeze; however, it is unclear which programs have resumed disbursing funding and which remain frozen.
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Calculated chaos for American manufacturers
The state of affairs sparked by EO 14154 has caused chaos across the country, with state and local officials rushing to ascertain which programs that their constituents and community members depend upon are paused and which are still disbursing funds.
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Two days after signing EO 14154, the administration clarified that the funding pause applied only to programs implicated in section 2 of the executive order. Section 2 specifically calls for “the elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies and effectively mandate their purchase by individuals, private businesses, and government entities alike by rendering other types of vehicles unaffordable.” This action will not make vehicles of any type more affordable and instead directs federal agencies to pause funding for the IRA and IIJA policies that are driving a manufacturing renaissance.
For example, the U.S. Department of Energy’s Battery Manufacturing and Recycling Grants and Battery Materials Processing Grants programs were investing $6 billion in domestic battery manufacturing, creating 19,000 jobs across the country, collectively. These programs now appear to be paused. Other programs implicated by EO 14154 are those key to supporting manufacturing, such as the Department of Energy’s Domestic Automotive Manufacturing Conversion Grants and Advanced Technology Vehicles Manufacturing Loan (ATVM) programs. The Domestic Automotive Manufacturing Conversion Grants Program supported the creation of 2,900 jobs and the retention of 15,000 more, while the ATVM Program played a key role in stabilizing Ford after the 2008 Great Recession. More recently, the ATVM Program provided a $2.5 billion loan to Ultium Cells, a joint venture between General Motors and LG Energy Solution, to build battery manufacturing facilities in Ohio, Michigan, and Tennessee.
On the heels of this uncertainty, manufacturers have already canceled almost $8 billion in planned domestic investment in 2025. In no uncertain terms, the Trump administration’s federal funding freeze is an effort to pull the rug out from under a domestic manufacturing sector just regaining its feet after decades of neglect, undermining new investments in clean technology manufacturing that are necessary for the U.S. manufacturing base to be competitive in the 21st century.
Effects of the Trump administration’s tariffs
In addition to creating chaos in federal contracts and investment, the Trump administration has also pursued unnecessary and often impulsive tariffs that do little to support American manufacturers and their workers—and stand to make cars produced in the United States far more expensive. Tariffs, when properly implemented alongside sound industrial policy, can help onshore industry and counteract the worst effects of globalization. The Biden administration did this by placing targeted, strategic tariffs on Chinese-made EVs and batteries, while helping U.S. automakers build up their domestic manufacturing and technological prowess. The Trump administration has done the opposite by placing blanket tariffs on key trading partners Canada and Mexico, forgoing the North American partnerships that were beginning to reorient global production patterns away from China. Trump’s ill-conceived tariffs will drive up auto prices by an average of $3,000 per vehicle at a time when his other tariff actions are making imports across industries more expensive as well. Massively increasing automakers’ material costs while simultaneously withdrawing federal support will translate into
job losses and higher consumer costs. These actions also come as the Trump administration has paralyzed the National Labor Relations Board, which is tasked with protecting workers’ rights, an issue of key importance as the administration’s actions create significant economic uncertainty. Furthermore, the disruption and uncertainty that President Trump has created could give automakers pause when considering future investments in U.S. manufacturing.
Winners and losers
American workers, companies, and energy consumers will not benefit from the reversal of IRA investments. The IRA set in motion a clean industrial renaissance, paving the way for approximately 108,000 new EV manufacturing jobs, and the Trump administration now looks to ensure that those jobs are never created. The IRA spurred more than $72 billion in private investment in EV and battery manufacturing, and the Trump administration now looks to ensure that those dollars were wasted. The IRA was set to lower household energy costs by an average of $1,000 per year, including by slashing transportation fuel costs, and the Trump administration now looks to ensure that consumers pay more, not less.
The IRA was set to lower household energy costs by an average of $1,000 per year, including by slashing transportation fuel costs, and the Trump administration now looks to ensure that consumers pay more, not less.
The EV manufacturing industry is not the only industry affected by the administration’s recent actions. Other domestic clean technology manufacturing industries such as solar and wind also face uncertainties, which have the potential to affect approximately 364,000 jobs and 131,000 jobs, respectively. However, one industry stands to win the most: oil and gas. EVs are expected to significantly reduce oil demand globally, and wind and solar now provide electricity that is cheaper than natural gas. Yet despite these facts, wind, solar, and EVs were not only left out of President Trump’s executive order but also explicitly attacked by it.
The Trump administration’s efforts to hobble American clean technology manufacturing will spare the oil and gas industry from the fate of being outcompeted by cleaner technologies. It will also ensure that Americans remain dependent on the oil and gas industry for the foreseeable future—whether for heating, cooking, or transportation—despite the fact that more affordable alternatives exist. Notably, these efforts follow President Trump’s transactional offer to the oil and gas industry during his campaign, in which he solicited the industry to contribute $1 billion to his reelection campaign in exchange for him gutting government investments in clean energy manufacturing, especially EVs.
There is also another incidental winner that the Trump administration is less than keen to point out: China. Since the early 2000s, China has invested heavily in its EV, battery, and other clean technology industries. The IRA and IIJA gave American companies an opportunity to compete in the global clean technology market. Reversing financial support and incentives for American clean energy manufacturers while China continues to support its own will have a very predictable outcome: China will dominate the global energy technology manufacturing industry, U.S. manufacturers will lose market share, and there will be close to 1 million fewer domestic jobs by 2030.
Conclusion
The Trump administration’s attacks on America’s clean technology manufacturing have the potential to cost thousands of American jobs, and in the long term, they will harm domestic manufacturing competitiveness and the supply chains that American producers rely on. In pursuing these policies, the Trump administration has threatened not only the livelihoods of the thousands of Americans working in the clean technology sector right now but also the future of American industry as a whole.