Donald Trump’s victory in the U.S. presidential election last Tuesday has put into jeopardy President Joe Biden’s efforts to invest in new technologies that will be key to the intense competition between the U.S. and China for primacy in green energy. While Trump shares Biden’s penchant for the manufacturing sector, he and Vice President-elect JD Vance have both criticized renewable energy sources as an alternative to fossil fuels. In particular, both have also vowed to roll back Biden’s subsidies on electric vehicles, or EVs, which Trump has called “lunacy.”
To be sure, U.S. industrial policy is here to stay for the foreseeable future no matter which political party is in power, because competition with China remains the dominant concern in Washington. But as I wrote last month, while the U.S. will continue to try to bolster industries important to technological innovation and national security, the incoming Trump administration’s approach will rely more on tariffs than on regulation compared to Biden.
While industrial policy elevates the role of the state in picking which sectors to protect and develop with public funds, it also increases the clout of already powerful industry leaders and titans who ultimately stand to gain the most from government spending. Nowhere is this clearer than in the elevation of Elon Musk, the head of the EV manufacturer Tesla, to the ranks of Trump’s inner circle in the last several months of the presidential election. Musk funded and managed the Trump campaign’s voter mobilization drive through his America PAC organization. He used the social media platform X to amplify Trump’s message. And he also campaigned personally for Trump at major rallies throughout the fall.