President Donald Trump is set to take swift action on his first day back in office, signing a series of executive orders, memoranda, and proclamations on Monday, January 20, 2025. Among these actions is an executive order that targets the Biden administration’s electric vehicle (EV) policies, while the implementation of tariffs, particularly on imports, is being held off, at least for now.
Executive Order on Electric Vehicles
One of the key moves expected from Trump is the signing of an executive order aimed at undoing the previous administration’s “electric vehicle mandate.” While there was no specific EV mandate issued by President Biden, his administration did put in place a range of policies and incentives designed to encourage EV adoption. These include tax credits for consumers purchasing electric vehicles and federal support for the development of EV production and infrastructure.
Trump’s order is anticipated to challenge these initiatives, potentially impacting the trajectory of the EV market in the U.S. During his campaign, Trump expressed his opposition to the federal tax credit for electric vehicles, calling it a “green new scam” that would hurt the auto industry. His administration is expected to cut funding for EV programs and shift those funds toward national defense efforts and securing battery supplies domestically.
This action could include rolling back the $7,500 federal EV tax credit and the $7.5 billion plan designed to build out EV charging stations. The new administration appears to be focusing on boosting domestic battery material production instead.
Implications for the EV Industry
The implications of this executive order are significant for the electric vehicle industry. It could lead to:
- Reduced incentives for consumers: The elimination or reduction of tax credits may make EVs less affordable for some consumers, potentially slowing down the rate of adoption.
- Slower infrastructure growth: Cutting funding for charging station development could hinder the expansion of the EV charging network, a critical component for EV growth.
- Shift in industry focus: The push for domestic battery material production may lead to a greater focus on securing domestic supply chains, potentially impacting international trade dynamics.
- Uncertainty in the Market: The policy changes and potential tariffs create uncertainty for car manufacturers, making it difficult for companies to make long-term plans.
Holding Off on Tariffs
While the Trump administration is moving forward with an executive order on EVs, it is, for the moment, holding off on implementing the tariffs. This is a notable decision given that tariffs were a key element of Trump’s trade policies during his first term in office and have been a significant topic of discussion since his re-election.
During his campaign, Trump suggested imposing tariffs on all imports, including a 25% tax on goods from Mexico and Canada, and a 10% tariff on goods from China. He also proposed a 200% tariff on cars produced in Mexico if they target the U.S. market. However, these tariffs are not part of the initial actions being taken on his first day.
Potential Reasons for Delay
Several reasons might be contributing to this decision to hold off on tariffs:
- Economic impact: Tariffs have the potential to raise consumer prices and disrupt supply chains. Delaying tariffs may allow the administration more time to assess the potential economic impacts and consequences.
- Negotiating leverage: The threat of tariffs can be used as a negotiating tool. Holding off on implementation may give the administration more leverage in trade talks with other countries.
- Legal and logistical considerations: Implementing tariffs typically requires congressional oversight and findings from relevant government agencies, a process that can take time. The administration may also be exploring alternative legal avenues such as the International Emergency Economic Powers Act (IEEPA) to expedite tariff impositions.
- Focus on Immediate Priorities: The new administration may be prioritizing immediate actions to roll back the previous administration’s policies, and focusing on more controversial trade policies may be a secondary consideration at this time.
Potential Future for Tariffs
While tariffs are not part of the initial executive actions, they may still be on the table for the future. Trump has previously shown a willingness to use tariffs to reshape trade relationships and bolster domestic industries. It is likely that the administration will continue to explore the use of tariffs as a tool to achieve its policy goals.
The prospect of tariffs on electric vehicles and battery materials also remains. Some reports suggest that Trump’s transition team has recommended imposing tariffs on all battery materials globally, before negotiating individual exemptions with allies. The specifics of these actions, however, are still unclear and may depend on future negotiations and policy developments.
Broader Implications
The executive order on electric vehicles and the decision to hold off on tariffs are part of a broader set of policy actions that Trump is expected to take on his first day back in office. These actions include:
- Declaring a National Energy Emergency: Trump plans to declare a national energy emergency, which will likely lead to increased fossil fuel production and fewer environmental regulations.
- Border Security: Trump is expected to declare a national emergency at the U.S. southern border, tasking the military with border enforcement, designating cartels and gangs as terrorist groups, and attempting to terminate birthright citizenship.
- Rolling Back DEI Programs: The new administration plans to end diversity, equity, and inclusion programs in the federal government.
- Reversal of Biden Era Policies: A core tenet of the first day is to undo many of the policies enacted by the previous administration in an effort to implement “America First” policies.
These actions signal a significant shift in policy direction and are expected to have a wide range of impacts across various sectors of the economy and society.
Conclusion
The executive order on electric vehicles and the temporary hold on tariffs represent significant moves by President Trump on his first day back in office. While the EV order is set to impact the electric vehicle industry by altering the incentives and support mechanisms for EVs, the delay in tariffs suggests a more cautious approach to international trade. The combined impact of these actions, along with other planned policy changes, will be closely watched as they unfold in the coming days, weeks, and months. The implications for various industries, international trade, and the broader economy will be substantial.
