Trump's 'Big Beautiful Bill': What's Next for Manufacturing?
The signing of the “One Big Beautiful Bill Act” (OBBB Act) by President Donald Trump on 4 July alters the landscape of the United States’ energy policies and brings potential implications for the manufacturing industry.
Through the OBBB Act, numerous previously established clean energy incentives under the Inflation Reduction Act (IRA) are being phased out, impacting future project timelines.
At the same time, the act extends the support towards fossil fuel enterprises, creating complex challenges for an industry already striving for sustainable solutions.
Challenges in meeting energy goals
Under the Act, new guidelines are being introduced for technology-neutral tax credits related to power and storage projects, marking an important adjustment for stakeholders in the manufacturing sector.
Projects initiated by 31 December 2025, may evade newly imposed restrictions, including those governed by the Foreign Entity of Concern (FEOC) rules that target Chinese equipment.
A shift in deadlines means projects in the pipeline must be operational by 2027 to qualify for tax benefits.
Post-2027, wind and solar initiatives will lose access to key tax incentives like the Production Tax Credit (PTC) and the Investment Tax Credit (ITC) unless they fulfil stringent criteria.
Princeton University analysis estimates indicate the rollback in tax credits might drop new wind and solar capacity by 70 GW heading to 2030, potentially increasing household energy expenses by around US$165 per year and reducing projected emissions reductions from a goal of 40% down to only 3%.
Electric vehicle infrastructure under pressure
The EV category faces a critical setback as a result of Trump's move, with the abolishment of the Commercial Clean Vehicle Tax Credit (Section 45W), which previously offered between US$7,500 to US$40,000 per vehicle for acquisitions post-September 2025.
This shift influences efforts to replace municipal fleets, incorporating sectors such as school transportation, public works and police services.
Additionally, the phase-out of the Alternative Fuel Infrastructure Tax Credit, which backs EV and hydrogen station installations, for projects not in service by 30 June, 2026, poses a hindrance to the necessary expansion of charging networks.
Consumer incentives, including Section 30D and Section 25E tax credits for new and used clean vehicles, will also cease by September 2025, which may result in eight million fewer EVs sold this decade per Princeton forecasts.
Considerations for hydrogen projects, storage and geothermal
Hydrogen sector projects must now initiate construction by 2027 to benefit from the Section 45V hydrogen production credit of up to US$3/kg, moving the timeline forward by five years compared to the IRA.
However, fuel cell projects gain an exception from emissions testing and labour commitments to be eligible for a 30% ITC, but this only applies to those beginning construction after 2025.
Programmes that commence within 2025 face a legislative discrepancy since they don't qualify for conventional or new incentives.
Projects focusing on battery storage and geothermal operations are set to maintain tax credit eligibility until 2033, before a phased decline over the following years. Nonetheless, these technologies must comply with FEOC regulations starting January 2026.
Considering China's prominence in battery supply chains, adherence to these constraints will be challenging. However, geothermal technology may find success due to a more robust domestic supply landscape, providing viable options for municipal decarbonisation initiatives.
Navigating the road ahead
The FEOC stipulations restrict projects and firms from leveraging tax credits if there's significant reliance on components, funding, or technological agreements from countries deemed foreign entities of concern, including China, Russia, Iran and North Korea.
Although these restrictions officially launch in 2026, their ambiguity already casts uncertainty over developers.
Stakeholders must strengthen supply chain documentation to retain eligibility for tax credits amidst evolving regulations.
In this new regulatory setting, while the OBBB Act introduces obstacles, it underscores the necessity for firms in the manufacturing sector to prioritise innovation and adaptability.
Engaging local governments, expediting project timelines and focusing on community outreach can provide pathways to navigate the looming changes effectively, encouraging efforts towards sustainability and resilience despite the challenges introduced by recent policy shifts.
“President Trump’s One Big, Beautiful Bill delivers on the common sense agenda that nearly 80 million Americans voted for – the largest middle-class tax cut in history, permanent border security, massive military funding and restoring fiscal sanity,” comments Karoline Leavitt, Press Secretary for The White House.
“The pro-growth policies within this historic legislation are going to fuel an economic boom like we’ve never seen before.
"President Trump looks forward to signing the One Big, Beautiful Bill into law to officially usher in the Golden Age of America.”