Turning Back the Clock: Industrial, Economic, and Diplomatic Fallout from the U.S. Climate Policy Reversal

The second Trump administration’s reversal of federal climate policy is reshaping the U.S. energy and industrial landscape, with significant implications for macroeconomic performance, clean technology competitiveness, and global climate cooperation. While the deregulatory shift and emphasis on fossil-fuel production may generate short-term output gains in selected sectors, the long-term structural transformation necessary for sustained growth in an increasingly low-carbon global economy is likely to be undermined. President Donald Trump’s efforts to dismantle the Inflation Reduction Act (IRA) and related climate policies has disrupted private investment flows, stalled infrastructure deployment, and raised uncertainty for firms in clean-energy supply chains. Simultaneously, regulatory weakening—particularly of emissions standards—has heightened fiscal and systemic risks, while eroding the credibility of U.S. financial markets in pricing climate exposure.