If Trump Destroys Inflation Reduction Act, Economic Fallout May Come

Forbes

23-03-2025

Block Island, R.I: Deepwater Wind installing the first offshore wind farm at Block Island, Rhode ... More Island, August 14, 2016. (Photo by Mark Harrington/Newsday RM via Getty Images)
Louisiana may be known as an oil and gas state, but it is now getting its feet wet by trying to build offshore wind energy developments in the Gulf of Mexico. Even though the deal has bipartisan support, the Trump Administration is trying to block all such wind projects in federal waters.
President Trump signed an executive order that stopped all offshore wind energy projects. Trump doesn't believe in climate change and thinks fossil fuels are the way to go. What makes him tick? The administration said this strategy will lower energy costs, create more jobs, and meet the growing energy demand. However, look to ruby-red Louisiana, which views offshore wind as a job creator and a vehicle to reduce electricity price volatility.
'We are at an inflection point now on the way energy economics works,' says Fox Swim, a senior solar researcher for Aurora Solar, in a Zoom interview. 'This administration is willing to break the law and norms. It is willing to inflict economic damage on the rest of the country to fulfill its vision. The renewable energy industry must lean hard on state governments. If states value stability in our grid and renewable energies, then these jurisdictions must do the right thing.'
The Inflation Reduction Act (IRA) is in danger now. It passed in 2022, creating green energy programs nationwide. But if the projects die, economic stimulation does as well. If the Trump Administration gets rid of the IRA, then Energy Innovation said it would cost consumers $32 billion in energy bills, while gross domestic product falls by $190 billion by 2035. We lose hundreds of thousands of jobs too.
Trump cannot simply eliminate the law, but he can gradually dismantle it. He could slow the rollout or make fossil fuel investments more valuable than those in renewable energy. So even if the law is still on the books, it might not have much of an effect.
Swim points to the Endangerment Finding, the scientific and legal basis for regulating greenhouse gases that cause climate change. In 2009, the U.S. Environmental Protection Agency started overseeing those emissions under the Clean Air Act. She thinks the administration will rewrite the law to say, 'Climate is not a problem.' She also believes the administration will revise the IRA to say which technologies qualify for tax credits.
So, here's the scoop: Aurora's new survey revealed that 57% of business owners favor keeping the IRA, while only 29% want it gone. And guess what? A whopping 78% of business owners want to make the most of their IRA benefits. Now, let's talk about homeowners. Awareness of the IRA has skyrocketed from 51% in 2024 to a colossal 77% in 2025.
Interestingly, 48% of installers believe that a reduction in funding from the IRA would negatively impact their business.
'Joe Biden created the IRA, and he fundamentally shifted the way we do clean energy in the U.S. Trump could just as easily shift the needle in the opposite direction,' says Swim. 'The government uses subsidies to promote technologies and industrial policy. The subsidies must exist to bring renewables to the level where they can compete with extremely subsidized petroleum industries.'
GULF OF MEXICO - JUNE 25: The Transocean Discoverer Enterprise drillship burns off gas collected at ... More the BP Deepwater Horizon oil spill in the Gulf of Mexico off the coast of Louisiana on June 25, 2010. An approaching tropical disturbance may force collecting operations involving ships and other siphoning equipment to be temporarily halted. This may cause oil to flow unchecked from the well until the weather improves and siphoning operations can be restored. (Photo by)
New York State planned to transform one of its largest fossil fuel plants into a renewable energy powerhouse. It would've used offshore wind energy, battery storage, and geothermal power to make clean energy. But guess what? Those plans are on hold because of Trump's executive order that put a stop to all offshore wind projects. This deal would've been a game-changer, providing power to 2 million homes and generating a massive 2.6 gigawatts of electricity.
The Trump administration has started undoing over 30 environmental rules that were put in place by the previous administration. They're eliminating caps on power plant emissions, reducing protections for rivers and streams, and making it easier for cars to pollute.
The president has given his EPA the green light to keep some coal plants running. That's on top of the plans to weaken rules for monitoring pollution from power plants. For instance, he's targeting the mercury rules and those that regulate coal ash, which is the waste left behind when coal is burned and caused widespread damage in the Tennessee Valley Authority's areas. Trump has also called the IRA the 'Green New Scam.'
Trump has also withdrawn from the voluntary Paris Agreement that tries to limit temperature increases to 3.5 degrees Fahrenheit by mid century.
'We're not going to do the wind thing,' Trump told rallygoers. 'Big, ugly windmills, they ruin your neighborhood.' He later wrote on social media, 'After years of being held captive by Environmental Extremists, Lunatics, Radicals, and Thugs, allowing other Countries, in particular China, to gain tremendous Economic advantage over us by opening up hundreds of all Coal Fire Power Plants, I am authorizing my Administration to immediately begin producing Energy with BEAUTIFUL, CLEAN COAL.'
Have we become immune to this language? The madman theory applies to the idea that foreign foes shouldn't tempt a leader because they are too unpredictable. Trump, though, is driven by vindictiveness and the desire to undo the successes of his predecessors, and not by the greater good.
WASHINGTON, DC - AUGUST 12: Rep. Jamie Raskin (D-MD) (L) and Rep. Pramila Jayapal (D-WA) arrive for ... More a news conference with fellow members of the House Progressive Caucus ahead of the vote on the Inflation Reduction Act of 2022 outside the U.S. Capitol on August 12, 2022 in Washington, DC. Despite not achieving everything the House liberals wanted, the $737 billion act will focus on slowing climate change, lower health care costs, and creating clean energy jobs by enacting a 15% corporate minimum tax, and a 1% fee on stock buybacks, and enhancing IRS enforcement. (Photo by)
The real checks and balances might not come from the legislative branch, which seems scared of him, but from American businesses, which might actually have more power than the president.
Market powers trump presidential levers. Companies have gone beyond just focusing on shareholders. They now include communities and employees in their mission. This strategy is called the 'triple bottom line,' which considers the planet, people, and profits. Ignoring this can hurt a company's well-being. Cisco, Oracle, and IBM are among the many companies that are leading the sustainability challenge.
America's energy picture illustrates the point: Coal has fallen from 50% of the electricity mix in 2008 to 16% today, while renewables keep blossoming, now at 20%. That's a market choice. No U.S. utility company has any plans to build coal-fired power, including the two biggest, American Electric Power and Souther Company, which are trying to ditch their coal plants.
Aurora's Swim worries that corporations will reverse their net-zero goals, although that is a gamble—one that could bring lawsuits, lose customers, and damage their brands. That said, Earth.org listed a series of "backtracking companies:" Goldman Sachs, Wells Fargo, Citi Bank, Bank of America, Morgan Stanley, and JPMorgan pulled out of a industry climate alliance. Meanwhile, Blackrock withdrew from the Net-Zero Asset Managers, and American Airlines removed a reference to its "urgent" climate actions.
"Trump is here for four years," says Swim. "There will be a midterm, and political gravity will catch up with his actions. But this administration is willing to inflict economic damage —even incurring a recession—to remake the country into the vision it has.' Witness the tariffs and the whirlwind they have taken this country.
"There are strong conservative and economic cases for renewables," she continues. "Supporters must push legislators to say these policies make sense for your state and bring tangible benefits to your community. Maybe their leaders don't care about climate change, but they do care about power outages and recovery costs.'
If Trump destroys the IRA, economic fallout could follow. While the president may be bound to the past and blinded to the country's future promise, he knows how to read the political landscape—the best hope of staving off a free fall and even more environmental problems.
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