The Art of the Deal?
The first 100 days of Donald Trump’s second term has been a rollercoaster. The elephant in the economic policy room over this whole period has been trade, and more specifically, tariffs. But are the prospects for the EV transition under Trump’s presidency? And what does that mean for the UK? Buckle up and hold on to your hats!
Trump’s tirades against (non-Tesla) electric vehicles (EVs) are well documented. He spent a not insignificant amount of time out on the campaign for the 2024 United States Presidential election criticising EVs, California’s EV mandate (Advanced Clean Cars II), as well as Joe Biden’s 50% ZEV target for 2030. It came as no surprise then that on Trump’s first day in the White House amongst his record-breaking number of Executive Orders was the rescinding of Biden’s non-binding 50% ZEV target.
The non-binding part here is important - for while no manufacturers would have faced punishments for non-compliance (without additional legislation), the signing of the Executive Order did send a signal to the car manufacturers that operate in the United States that the direction of travel was towards significantly de-carbonising road transport - and with plenty of notice. Now, Trump’s rescinding of this Executive Order more than three years later sets to undermine the work towards electrifying vehicles on American roads. While this move itself was more to show a marker of intent, in addition to this Trump made a significant call with very real potential for undermining the reduction of carbon emissions from road transport - he called for a review of emissions rules set by the Environmental Protection Agency (EPA). These rules set the fleet-wide target for emissions reduction between 2027 and 2032 based against 2026 numbers which it is expected would mean new vehicle registrations would have to reach a 56% market share for EVs by the end of the period.
After a tense month of waiting to see where Trump’s tariff rhetoric would lead, on the 3 March Trump announced flat tariffs of 25% on all goods imported from the United States’ USMCA partners Mexico and Canada which were due to commence the following day. This would see the US setting an additional tax on more than one in three cars sold in the US. Notably, these tariffs were backed by United Auto Workers (UAW) president Shawn Fain who, in a piece for The Washington Post, argued the tariffs should help to “bring jobs back to America” and that the USMCA should be re-written, arguing that the UAW should also have a seat at the table for that re-writting. This came after Fain was seen in a “Trump is a scab” shirt mere months earlier at the 2024 Democratic National Convention (DNC) where he was endorsing Kamala Harris for president.
On 5 March, a mere day after the initial tariffs came into force, Trump gave his first concession giving a one month reprieve from tariffs for vehicle manufacturers who continue to abide by the rules of the USMCA.
In the background of these trade tensions key financier of Trump’s presidential campaign and Tesla owner Elon Musk was under fire for the actions of the Department of Government Efficiency, the department he is widely considered to be leading - or at least have a key role in its direction, as well as his widely-perceived Nazi salute carried out following Trump’s inauguration. This saw a rapid decline in Tesla stock and talks of boycotts globally on their cars - calls that Trump not only referred to as “illegal”, but also saw him buy a Tesla in an event at the White House in a show of “confidence and support” in Musk.
On 2 April Trump announced plans for a new range of what some have suggested were AI generated tariffs for his “Liberation Day”. One of the headlines of the Liberation Day actions would be 25% tariffs on all vehicle and vehicle part imports to the US - a rate that one paper by the US International Trade Commission from February 2024 found could see a 74% decline in vehicle imports - which was seen as a protectionist move for domestic vehicle manufacturers. On top of these tariffs on vehicles Trump enforced a minimum 10% general tariff on all countries, with the UK managing to pick up only this minimum level, where our EU neighbours were faced with a 20% tariff - a measure which even Italian Prime Minister Giorgia Meloni was critical of.
A mere week after Trump’s Liberation Day we saw another concession from the White House with the rollback or reduction of a large number of tariffs for 90 days seeing many countries see their “base tariff” drop to Trump’s minimum rate of 10% including Japan and the EU. This reduction, however, did not apply to Canada and Mexico.
Now, as the somewhat erratic trade-war of the US vs. everyone else continues and we head beyond Trump’s first 100 days it would be remiss of us as a UK based NGO to not talk of the impacts of the early days of this presidency here.
On 7 April British Prime Minister Keir Starmer took a visit to JLR’s Solihull plant in the West Midlands, where JLR produces a range of Land Rover and Jaguar products, to announce a significant watering down of the ZEV Mandate. It seems a hard case to make that the proposed amendments to the legislation announced at this event (and published here) were a cohesive and well debated plan by Ministers, but rather a rushed collection of ideas that represent a significant concession to multinational companies that have failed to plan for the inevitable shift to electric vehicles, at the cost of UK-based businesses that were busy installing charge points or building battery manufacturing capacity, creating new jobs in every nation and region of the UK. Following the announcement industry voices and manufacturers leant into the idiom “give an inch, take a mile” when they expressed that this was merely a good first step, but they were still expecting more concessions.
The announcement was brought forward as a direct response to the tariffs from the US on all imported vehicles. In 2023 the Office for National Statistics (ONS) reported exports to the US accounted for 18.4% of total car exports from the UK. While it is important to note that these tariffs could be seriously harmful to the UKs exporters to the US, such as JLR, and the UK government should look at ways of helping manufacturers in the UK through this period, exports are not included in the ZEV Mandate and so there is not necessarily clear how watering down the mandate will improve export numbers.
For a breakdown of our initial thoughts on the amendments to the ZEV Mandate check out our briefing “Shifting Sands: Changes to the UK EV Targets”.
While the reaction by the UK government has no doubt been weak-handed the direct reaction by the EU has seemed more balanced. While Trump’s tariffs have been aimed at attacking China very specifically they have also forced increased co-operation between other nations and the super-power - with the US tariffs on the EU bringing the two parties to the table on replacing tariffs on vehicles produced by Chinese owned manufacturers with a minimum pricing model which would allow the vehicle market to stay diverse while allowing European manufacturers to keep competitive.
Returning to the United States, 22 April saw two significant, and likely connected, announcements. The first of which was Tesla’s announcement of a 71% decline in profits in Q1 2025 (year-on-year) during their quarterly webcast to shareholders. The second being the news of Musk deciding to step back from his role in the Trump administration - an announcement that comes just a month shy of when his status as a Special Government Employee would have run out for 2025. While he shared he would still stay on at a reduced number of days per week, the news will likely have helped to soften the blow of the poor Q1 performance to Tesla shareholders with the move foreshadowing a 9% bump in the company's stock by the end of trading on 24 April.
While it has been a turbulent first 100 days under the second Trump administration and while it has, perhaps unsurprisingly, lacked positive stories in the world of transport decarbonisation it is as powerful a reminder how climate change is a global issue and so it is more important than ever for governments to stand strong on their climate commitments - such as the ZEV Mandate.