It is reported that if former US President Donald Trump wins the presidential election next year, he will significantly reduce subsidies for electric vehicles under the Inflation Reduction Act (IRA). Former President Trump also plans to withdraw from the Paris Climate Agreement, which agreed to reduce carbon emissions, and significantly relax regulations on the production of fossil fuels such as oil in the United States. The intention is to cancel U.S. President Joe Biden’s eco-friendly policies, such as the expansion of electric vehicles. There are concerns that it will be a huge blow to Korean companies that have invested a massive 72 trillion won in the United States.
Senior officials from former President Trump’s presidential campaign told the Financial Times (FT) on the 23rd (local time), “We will fundamentally reorganize the IRA based on tax cuts and subsidies for clean energy.” “It appears that the amount of taxes that go into IRA subsidies and tax breaks has been grossly underestimated,” the official said. “We are trying to cut a lot of that spending.”
‘Project 2025,’ a policy proposal put forward by former Trump administration officials led by the Heritage Foundation, also said of the IRA, “This is to pay hundreds of billions of dollars in subsidies to renewable energy developers and special interest groups,” and “It is a way to reduce the subsidies that have already been paid.” “I support abolishing all funding except those.”
IRA offers a tax benefit of $7,500 for electric vehicles that are finally assembled in North America. Additionally, if batteries are produced in the United States, a subsidy of $35 to $45 per kW (kilowatt hour) is provided. Accordingly, domestic automobile and battery companies have made large investments in the United States. According to the White House, since the inauguration of the Biden administration, investments by Korean companies in the United States have amounted to $55.5 billion (about 72 trillion won).
However, if former President Trump is elected and drastically cuts IRA subsidy benefits, it is expected to directly affect the profits and losses of domestic companies invested in the United States. In particular, there are concerns that if the Biden administration’s plan to convert more than 50% of new cars sold in the United States to electric vehicles by 2030 is withdrawn, it will be a major negative factor for the electric vehicle market, which is already facing concerns of slowing down.
During the strike of the United Automobile Workers (UAW) in September, former President Trump responded to President Biden’s policy of expanding electric vehicles through the IRA and others, saying, “We will stop this madness immediately,” and announced a plan to completely cancel the policy to expand electric vehicles. .
In Trump’s second term, climate response policies such as carbon phase-out cooperation are also expected to be withdrawn. David Banks, who served as special adviser for energy and environment in the Trump administration, told the FT that “President Trump is a climate change skeptic,” and that “he will definitely withdraw from the Paris Agreement.” Former President Trump is also known to loosen energy regulations and allow large-scale oil and gas drilling on land owned by the U.S. federal government.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.