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November 12, 2024 - What does another four years of a Trump presidency mean for American engineering and manufacturing?
Oil and Gas
Perhaps the most conclusive industry to benefit from a Trump presidency is oil and gas, which gave more than $20m to Trump political action committees during his campaign.
Traditionally, Republicans have supported extraction industries, and Trump is no different, embracing the classic “drill, baby, drill” mantra.
American oil and gas production actually hit record highs under the Biden administration, partly due to Russia’s invasion of Ukraine causing Europe to turn to the USA for imports.
However, Biden also enacted environmental regulations restricting drilling on federal lands, such as the National Petroleum Reserve in Alaska, for example.
Americans can anticipate that Trump will roll back environmental regulations to expand oil and gas exploration on federal lands. He has spoken of reducing drilling regulations since before his first term.
"America's incredible energy potential remains untapped. It's a wound that is totally self-inflected," Trump said during a speech at the 2016 Williston Basin Petroleum Conference in North Dakota.
More recently in his victory speech, he vowed to “unleash American energy” and plans to “free up the vast stores of liquid gold on America’s public land for energy development”.
Provisions such as continuous methane leak monitoring and new equipment standards could be cut with the intention of limiting obstacles to drilling. It is also possible he could try to expedite drilling permits.
Mining
While the USA is somewhat dependent on China’s critical mineral supply chain, the mining industry is still active across the country.
Coal is a frequently mined commodity in states such as Wyoming, West Virginia, Pennsylvania, Illinois and Kentucky. Copper is another common material, found in Arizona, Montana, Nevada, New Mexico and Utah.
Other minerals commonly found in the USA include gold, iron ore, lithium and uranium.
The Biden administration toed the line between supporting the mining industry and backing environmental movements. In doing so, Biden imposed a 20-year mining ban in Minnesota’s Boundary Waters to protect threatened species and wild rice beds.
At a Minnesota rally in July, Trump vowed to undo this ban, stating, “I will reverse the Biden-Harris attack on your way of life and we will turn the Iron Range into a mineral powerhouse like never before.”
During Trump’s first term, he enacted a controversial land exchange, giving up holy Native American land in Arizona to mining project Resolution Copper. Biden reversed this decision upon entering office.
With Trump back in power, Americans can expect further deregulation of the mining industry to promote American blue-collar work and independence from China’s resources.
"[I] find that a strong America cannot be dependent on imports from foreign adversaries for the critical minerals that are increasingly necessary to maintain our economic and military strength in the 21st century," said Trump in a 2020 executive order.
His decoupling from China will also take the form of tariffs on 60% to 100% of goods from China on top of his proposed blanket tariff on all imports of up to 20%.
Transport
It is clear that Trump wishes to move vehicle production to the USA as much as possible, offering companies located in the USA “the lowest taxes, the lowest energy costs and the lowest regulatory burden” in a Georgia rally in September. This could hurt European automakers who are likely to be slapped with a tariff.
Trump has made conflicting statements about electric vehicles (EVs). Historically, he has been heavily against the roll out of EVs, promising to “end the EV mandate on day one” during his July speech at the Republican National Convention in Wisconsin.
The “mandate” to which he referred is the Biden administration’s goal to convert half of all vehicle sales to EVs by 2030. Biden also promised to build 500,000 chargers, although progress on this front has been slow. Trump referred to these efforts as “lunacy” in a 2023 Christmas post on Truth Social.
In fact, Trump has previously made several statements about EVs which, while inaccurate, reveal his long-standing resistance against them. Trump said that EVs don’t go far beyond your local shop, and that battery-powered cars cannot drive in the cold. (Most EVs have a range of 110 to 300mi, with some expensive models reaching 400 to 500mi, and while temperature can impact battery performance, EVs do, in fact, work in the cold).
He had similar reservations about battery-powered boats, saying the battery will cause the boat to sink and potentially electrocute those onboard. “The problem is the boat is so heavy it can’t float,” he said at a Nevada rally in June (Batteries are sealed against water ingress and do not cause boats to sink in this manner).
However, Trump changed his tune after a $75m donation by Elon Musk into political action committee America PAC, created by Musk himself.
“I’m for electric cars. I have to be because Elon endorsed me very strongly,” said Trump at a Georgia rally in August.
Is Trump’s change of heart and his desire to produce vehicles domestically enough to expect more EV infrastructure production during his presidency?
With such a sudden shift in his opinions, it is helpful to examine the bigger picture to answer that question. Last year, over one million electric cars were sold in the US for the first time, suggesting that even a withdrawal of government support will not halt sales growth.
If more EVs are sold with minimal increase in charging stations, however, Trump risks weakening the country’s electric infrastructure in the long term.
The USA’s main electrical grids are almost entirely isolated from each other, with one already weakened by the absence of federal winterization laws, due to its location in Texas. In previous years, winter storms have been enough to cause major power crises throughout the state, and a lack of suitable EV infrastructure could exacerbate the problem, especially as Tesla’s headquarters are in Texas.
The aerospace industry and companies like Airbus may also face a difficult four years, with Trump likely to impose tariffs on imports like he did during his first term. His proposal is to impose 60% tariffs on imported Chinese goods and 20% tariffs on all other imports.
It is also not likely that Trump will subsidize sustainable aviation fuels due to his skepticism regarding climate change, which he regularly calls a “hoax”.
Energy
It is safe to say that Trump will prioritize non-renewable energy sources, which will raise the profits of fossil fuel companies.
During his last presidency, Trump announced that the USA would pull out of the Paris climate agreement, but due to the treaty’s rules, Trump could not withdraw until after his term ended.
Should he decide to withdraw at the beginning of his second presidency, he will have three years to follow his own plan without reporting to the UN or assisting with the global reduction of greenhouse gases.
With this level of freedom, Trump may try to reduce or terminate tax credits for renewable energy projects, which he has historically criticized. After all, Trump vowed to pull out of renewable energy projects on the first day of his presidency.
“[Climate change] is one of the greatest scams of all time… people aren’t buying it anymore,” he said at a Pennsylvania rally in September.
When speaking about offshore wind turbines at a New Jersey rally in May, he said, “They destroy everything, they’re horrible and they’re the most expensive energy there is. They ruin the environment, they kill the birds, they kill the whales.” (Scientists confirm it is not wind turbines killing whales, but ship strikes and fishing gear entanglements.)
While Trump cannot simply eliminate existing wind turbines, he can delay new renewable projects and put resources into fossil fuels.
Trump has committed to resuming liquified natural gas (LNG) export permitting, for example, which the Biden administration halted. There are currently several LNG projects in Louisiana awaiting permits. “[Biden] doesn’t want [LNG] plants built in the United States, even though that’s the best thing you could do,” Trump said about the cessation.
The Biden administration’s Inflation Reduction Act, which allocated more than half a trillion dollars for projects such as clean technology, hydrogen and renewable energy could also be under threat. However, lawmakers in the states that have benefitted from the IRA need to vote to repeal it.
Instead of renewable energy, Trump will likely focus on oil and gas.
Electronics Manufacturing
The Biden administration encouraged electronics manufacturing through the CHIPS and Science Act, which provided billions in tax benefits, loan guarantees and grants to encourage American companies to build new chip manufacturing plants in the USA.
Trump criticized the act on Joe Rogan’s podcast, saying, “That chip deal is so bad. We put up billions of dollars for rich companies to come in and borrow the money and build chip companies here, and they’re not going to give us the good companies anyway.”
He added that “all you had to do was charge them tariffs”. However, tariffs are paid by the importer, not the exporter, and if costs for semiconductors become too high, companies may choose to relocate outside of the USA.
As a result, Trump may be advised to uphold this act to ensure as much internal production as possible.
In a June interview, Trump accused Taiwan of stealing “almost 100%” of the USA’s semiconductor industry, adding that Taiwan should pay the USA for protection from China.
Trump’s likely tariffs against China, will undoubtably force Americans to look inward and elsewhere for production.
However, Trump’s determination to galvanize American electronics manufacturing will likely face a series of logistical obstacles that Americans have already witnessed during previous attempts to rapidly reshore electronics production.
During his first term, Trump promised Wisconsin 13,000 jobs at a new Foxconn plant, where Foxconn agreed to support the factory’s infrastructure.
This project has since been all but abandoned, having experienced several problems like the ones American manufacturers will face during the next four years if Trump wishes to broaden American electronics manufacturing.
First of all, the USA has a struggling semiconductor workforce. In fact, American semiconductor industry could face a labor shortage of about 70,000 to 90,000 workers over the next few years.
Secondly, even if American factories get up and running, additional parts may still need to be imported because the American electronic parts production is simply scarcer than China. Batteries, wire, displays, speakers and semiconductor chips are all items that are generally easier to import from China.
This will leave electronics manufacturers in a tough spot between an American lack of resources and expensive tariffs on Chinese imports.
India’s electronics industry stands to benefit from Trump’s Chinese tariffs as companies distancing themselves from Chinese manufacturing will be seeking alternatives.
What Does This Mean?
As Trump tries to encourage domestic electronics, oil and gas, mining and transportation manufacturing through extreme tariffs, the prices of necessary imported components will increase. The final American-made product will also be more expensive as a result, a price that Americans will pay.
Renewable energy will be put on the backburner as national parks shrink to accommodate oil, gas and mining exploration. Americans can expect a resurgence in fossil fuel dependence as per traditional Republican values.
While some transition to renewables such as electric cars is inevitable, the amount of support expected by Trump remains unclear, due to his inclination to support causes based on donations and personal friendships.
Depending on future support he receives, Trump could surprise everyone with his decisions, but for now, a brief glance at the next four years emphasizes a rushed attempt at domestic production in as many areas as possible. |
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