The Business Impact of Trump’s Energy Policies & Tariffs
As Donald Trump prepares to make good on campaign promises, what will this pivot mean for U.S. businesses? From energy bills to operating costs, explore how Trump’s policies could impact your business finances and the economy at large.
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Key Takeaways
President-Elect Donald Trump plans to implement tariffs, cut climate regulations, and increase fossil fuel production. Presidential policies can gradually reshape energy market conditions, but it takes time. In the short term, his tariffs will affect small businesses. In the long term, renewable energy initiatives will become more scarce.
- Trump’s proposed policy includes a 60% tariff on Chinese goods and a blanket 10-20% tariff on other imports.
- By encouraging domestic fossil fuel production, this administration is predicting that it will lower energy costs and generate more jobs.
- One of President Trump’s main goals is to terminate the Green New Deal and the Inflation Reduction Act from the Biden administration.
- This major shift in policy from the Biden administration to the Trump administration has created uncertainty for businesses.
What are President-Elect Trump’s Energy & Trade Policies?
In his election victory speech, President Donald Trump promised to “govern by a simple motto: Promises made, promises kept.” Among these promises, he has vowed to “eliminate inflation” during his upcoming term. But how does he plan to achieve this? Below, we explore key components of President-Elect Trump’s energy and trade policies and their intended impacts on families and businesses across the United States.
More Tariffs – Especially on Chinese Goods
Trump’s proposed trade policy would introduce steep tariffs on imported goods. His proposed policy includes a 60% tariff on goods from China and a blanket 10-20% tariff on most other imports. The intended impact is to encourage American companies to source materials domestically, boosting local economies and decreasing reliance on foreign suppliers. However, these tariffs could also lead to production and cost-of-living inflation for businesses and consumers as imports become more expensive.
Cut Climate Regulations & Funding
Trump plans to reverse much of the Biden administration’s clean energy policies. Specifically, he wants to rescind unspent funding from the 2022 Inflation Reduction Act and roll back environmental manufacturing regulations. The intended impact of rolling back climate regulations is to support American car manufacturers and encourage domestic fossil fuel production. Trump believes these measures could potentially strengthen the U.S. automotive industry and improve energy independence. However, this shift will also slow clean energy investment considerably.
Encourage Domestic Fossil Fuel Production
A key aspect of Trump’s energy policy is to increase domestic fossil fuel production, including oil, natural gas, and coal. The administration intends for its fossil fuel focus to lower energy costs, boost the U.S. economy, and generate more jobs. However, a strong focus on fossil fuels may also introduce volatility in energy prices by drawing resources away from renewable energy sectors. A less diversified electrical grid can also lead to energy insecurity.
Can a President Directly Impact Energy Prices?
Nearly half of Americans believe that presidential elections have a stronger influence on energy and fuel prices than market forces. In reality, energy experts and economists agree that Presidents have minimal direct control over pricing. Instead, market dynamics—such as supply and demand—play the dominant role in determining energy prices.
However, Presidential political policies can gradually reshape market conditions. Policy changes made by Presidents gradually influence market conditions, inflation, and the cost of living throughout the course of their term. Their administration’s policies create a ripple effect that alters the energy landscape and economy in the long run.
Will Your Utility Bills Be Affected by Policy Changes?
With so much of the energy industry at the precipice of change, what does this mean for Americans’ energy bills?
Regarding fossil fuels, U.S. homes and businesses can anticipate that increased production will lead to lower natural gas bills. Similarly, gasoline for vehicles is likely to decrease with Trump’s proposed fossil fuel policies. In terms of fossil fuel-related energy prices, Trump’s policies could make commodities like natural gas and gasoline more affordable for consumers.
However, the future of electricity prices remains uncertain. While natural gas is used to generate some of the country’s electrical supply, our electrical grid uses diversified energy resources. Much of the nation’s power supply comes from nuclear power or renewables like solar and wind. Donald Trump’s proposed energy policy is expected to stifle the growth of renewables, putting us at odds with the growing electricity demands of Big Tech for data centers and AI. With higher electrical demands and a stifled electricity supply, power bills are likely to increase for businesses and households nationwide.
The Short-Term Impact of President-Elect Trump’s Proposed Policies
Though Trump’s energy policies won’t immediately change energy prices, his tariffs will quickly affect costs for small businesses across the U.S.
The Impact of Trump Tariffs on Small Businesses
International tariffs place significant financial pressure on U.S. small businesses, increasing the cost of imported goods across industries. For small business owners, this means the cost of merchandise or raw materials is likely to increase, especially for products and supplies made in China. These tariffs force small businesses to raise the price of their goods and services so they can remain profitable. As production costs and product prices rise, the inflation gets passed along to American consumers, leading to devastating inflation on everyday goods.
Beyond added production costs, tariffs can also disrupt supply chains and cause delays. This means that small businesses might not have access to ordering their usual products, impacting daily operations and profits. About 16.5% of the average U.S. business’s supplies and inventory are imported from China. Trump’s proposed tariffs would make these supplies much more difficult for small businesses with limited budgets to access.
Additionally, tariff-targeted regions, like China, provide many raw materials and components necessary for completing domestic clean energy projects. For example, there are more than 10,875 small solar panel businesses across the U.S. A 60% tariff on Chinese materials and goods would severely impact these small businesses’ ability to thrive. These tariffs would also slow renewable energy investment and development, further stifling the industry. Tariffs of this magnitude would deeply impact the fastest-growing job market in the country, affecting small businesses and job seekers nationwide.
Long-Term Impacts of President-Elect Trump’s Proposed Policies
The next four years could bring significant shifts to the American economy and energy landscape as Trump’s proposed energy and trade policies take hold.
Regional Impacts of Trump’s Energy & Trade Policies
Trump’s energy and trade policies will likely create distinct impacts for different regions across the U.S. Fossil fuel-dependent regions, especially those with economies tied to coal, oil, and natural gas, could benefit from increased production and lower fossil fuel rates. Trump’s focus on domestic fossil fuel production could improve job security in these areas, potentially offsetting economic challenges in historically fossil fuel-dependent economies.
On the other hand, regions investing in renewable energy and electric vehicle (EV) manufacturing may face more challenging obstacles. For example, renewable energy projects and regional EV infrastructure rely heavily on imported components. With Trump’s proposed tariffs, imported materials, especially those from China, would become significantly more expensive.
China is the global leader in clean energy technology, dominating the supply chains for solar panels, EV batteries, and wind turbines. They also have an 80% share of global lithium chemical production, an essential process for EV battery manufacturing. Trump’s proposed tariffs would increase the costs of renewable projects and EVs significantly, stalling progress and discouraging further investment.
Low-income communities nationwide may also be affected as tariffs will fuel inflation on essential goods. Tariff-related inflation will drive up the cost of living for families and small businesses nationwide. Additionally, drastic policy shifts often lead to energy market volatility. An unstable energy market creates investor hesitance. Unexpected changes in energy investor behavior could drive up energy costs across the country.
How Trump Energy Policies Impact the Clean Energy Economy
One of the key initiatives in President Re-Elect Trump’s energy policy is his promise to undo what he calls “wasteful” subsidies and incentives for renewable energy. The Biden-era Inflation Reduction Act (IRA) of 2022 was a historic investment in clean energy technologies. The IRA’s purpose is to kickstart the U.S. transition to emission-free energy sources. In just two years since it was written into law, the IRA has created more than 100,000 new jobs. 3.4 million Americans have taken advantage of this program to upgrade their homes and businesses, reduce their carbon footprint, and create energy independence. After four years of stalled progress, the IRA brought the U.S. back into the forefront of global clean energy progress.
However, Trump has different plans in mind. As recently as September 2024, Trump was quoted as saying, “My plan will terminate the Green New Deal, which I call the Green New Scam.” He continued with, “We will rescind all unspent funds under the misnamed Inflation Reduction Act…” Unfortunately, rescinding the unspent funding outlined in the IRA could have unexpected consequences.
Many businesses and homeowners took advantage of the IRA to fund solar panel installations, lowering their bills and creating greater energy independence. The IRA’s funding has also helped regions across the country establish more diversified energy resources for greater energy security and a more abundant power supply. Repealing this important policy could significantly slow the rate of renewable energy integration, contributing to climate change and a less stable electrical grid.
The Irony of Repealing Federal Funding for Clean Energy
The Biden Administration’s IRA is a complex obstacle for Trump’s incoming administration. The funding outlined in the IRA has already deeply embedded clean energy investments in Republican states, helping economies grow nationwide. A recent report by market research company E2 highlights the impact of the IRA’s incentives by state, sector, and industry as well as congressional districts. This report found that nearly 60% of announced projects funded by the IRA are in Republican congressional districts.
For example, Nevada has received $6.6 billion in funding for their Rhyolite Ridge and Thacker Pass lithium mines. This investment added 5,000 jobs to Nevada’s clean energy economy. Similarly, North Carolina received $19.7 billion in IRA funding, creating 22 new clean energy projects and 10,000 new clean energy jobs. One of these projects includes a new Toyota Motors EV and Hybrid battery plant, which will open for business in 2025. With this level of investment and economic growth, pivoting back to more fossil-fuel-centric policies could be a difficult task for the Trump administration.
Potential International Impacts of Trump Energy Policies
Under Trump’s proposed energy policies, the U.S. would likely struggle to meet international net-zero emissions targets. This would weaken our position in global climate agreements and international partnerships. Despite the ambitious sustainability efforts of the Biden Administration, Trump has suggested he would pull out of the historic Paris Agreement for a second time. Trump first withdrew from this international climate agreement back in 2017, making the United States the first country to revoke its decarbonization commitments. This measure ensured that domestic actions against climate change stalled throughout his first presidency. Since the U.S. is the second-largest contributor to global greenhouse gas emissions, revoking our decarbonization commitments has created tensions with many of our longstanding international allies.
Instead, Trump’s administration will likely focus on expanding fossil fuel exports, such as natural gas. While this move will benefit domestic natural gas enterprises, it is counterproductive to the sustainability investments of our key allies. Increasing fossil fuel exports might offer short-term economic gains. However, they would also challenge international efforts to lower emissions, straining relationships with longstanding trade partners committed to green initiatives.
If Trump reintroduces tariffs, similar to those from his previous administration, international backlash could once again become a barrier, disrupting trade relations and affecting the U.S. economy. Rolling back clean energy investments and enforcing new tariffs might help achieve his vision of economic independence, but could risk alienating allies in a globally interconnected market.
Historical Impacts of 2016-2020 Trump Tariffs: Federal Funding for Clean Energy
The previous Trump administration created international tension through tariffs, prompting swift retaliation that significantly impacted American households. Trump’s 2018 tariffs included a 25% tax on steel imports and a 10% tax on aluminum. In response, European Commission President Jean-Claude Juncker quickly announced retaliation, stating, “We will put tariffs on Harley-Davidson, on bourbon, and blue jeans – Levi’s.”
As a result of tariff tensions, the EU and other nations imposed retaliatory tariffs on goods from Republican-leaning states, targeting products like whiskey and motorcycles. Altogether, these policies added $80 billion in new taxes for Americans in 2018 and 2019, creating one of the largest tax increases in recent U.S. history. Former President Trump’s recently proposed tariffs could ultimately repeat this inflation. Economists estimate that his proposed 60% tariff for China and 10-20% blanket tariff could cause taxes to rise by another $524 billion annually. It’s also important to note that this figure doesn’t include any estimated retaliation tariffs, which could inflate taxes for Americans even further.
What Are Experts Saying About the Impact of Trump’s Economic Policies?
Trump’s tariffs and energy policy have the intention of reducing national inflation and the cost of living. However, economists and energy experts are divided on whether Trump’s energy policy will help or hurt American households and businesses. Discover unique perspectives from bipartisan economists and industry experts below:
“Two main pillars of his policy proposals, tariffs and mass deportations, are likely to cause prices to rise as they will make it more difficult for businesses to produce goods.”
Jacob Channel, Chief Economist at Lending Tree via CBS News
“A series of debt crises could come even sooner should the world drift to an economically destructive international trade war. That would certainly be the case should Trump win the election and impose a 60% import tariff on China and one of 10-20% on the rest of the United States’ trade partners.”
Desmond Lachman, Senior Fellow at American Enterprise Institute via Barron’s
How Can Businesses Prepare for Economic Changes?
While the impact of President-Re-Elect Trump’s proposed policies is uncertain, businesses can take action now for more economic stability.
Preparing Your Business for Political Policy & Economic Changes
President-Elect Trump’s proposed energy and trade policies mark a major shift from the Biden Administration’s climate-centric approach, creating uncertainty for businesses. Shifting from renewable energy investments to domestic fossil fuel production could impact inflation and energy costs in unpredictable ways. However, businesses can take steps now to guard against potential market shifts.
Reducing energy waste and securing a fixed-rate commercial energy plan can help stabilize costs in an ever-changing economy. If you want support in navigating these changes for your business, consider contacting the energy experts at Integrity Energy. For over 14 years, we’ve helped businesses nationwide control their energy expenses with reliable, cost-stabilizing solutions. Request a free quote to take control of your business energy bills today!
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About the Author 
Tim Trus
