Highlights

• Trump administration proposes cutting EV tax credits.
• Redirection of infrastructure funds.
• Lowering emissions standards.
• Strategic pivot focuses on battery production for defense needs over civilian EV adoption.
• Proposed policies risk disrupting automakers' EV strategies and global trade relations.
• Prioritization of national security interests.

As Rare Earth Exchanges has been predicting, Reuters in an exclusive (opens in a new tab) now agrees: the incoming Trump administration’s transition team has unveiled a strategy to dramatically shift U.S. policies on electric vehicles (EVs), critical minerals, and emissions standards.

Central to the plan are proposals to cut government support for EVs and charging infrastructure, impose tariffs on globally sourced battery materials, and prioritize national defense supply chains. These measures, aimed at reducing reliance on Chinese imports, mark a stark departure from the Biden administration’s balanced approach of promoting EV adoption while fostering domestic production.

Key recommendations include eliminating tax credits for EV buyers, redirecting funds from EV infrastructure projects to battery-minerals processing, and lowering emissions standards back to 2019 levels. The plan also seeks to block California’s stricter vehicle-emission rules, expand export restrictions on battery technology, and impose Section 232 tariffs to protect U.S. industries from perceived national security threats.

By focusing on boosting U.S. battery production for defense-related applications, the proposals highlight a strategic pivot to safeguarding critical mineral supply chains for military needs over civilian EV adoption.  Rare Earth Exchanges suggests this endeavor may be more challenging than anticipated.

Critics argue the recommendations could disrupt U.S. automakers’ EV strategies, including legacy brands like GM and Tesla, which have heavily invested in the EV transition. The plan assumes that ramping up domestic production and renegotiating trade terms with allies will mitigate short-term economic and supply chain disruptions—a highly optimistic view given the timeline required for mine permitting and infrastructure development. Additionally, the proposals risk increasing costs for U.S. consumers and industries reliant on critical minerals.

The plan exhibits a clear bias toward fossil fuel industries and traditional automakers, potentially sidelining the environmental and technological advancements tied to EV adoption. It downplays the challenges of establishing a robust domestic critical minerals supply chain while leveraging national security as a justification for trade restrictions. Furthermore, the approach may exacerbate global tensions by fostering further decoupling from China and pressuring allies to choose sides in a polarized economic landscape.  The article also does not acknowledge the extent to which Europe and elsewhere are down the path of decarbonization.

The proposed policies underscore the Trump administration’s intent to recalibrate U.S. priorities toward energy independence and defense interests, even at the expense of the EV sector’s growth. While these measures aim to enhance national security, they introduce significant risks to the country’s climate goals (which we predict will be tossed out), international trade relations, and the momentum of the global EV transition.