What will become of the IRA?

With Donald Trump’s election win, will the Inflation Reduction Act (IRA) survive?

The policy that Joe Biden introduced in August 2022 has seen the injection of more than $110 billion into electric vehicles (EVs) and battery sectors.

According to Benchmark Mineral Intelligence, this has seen the US 2030 gigafactory pipeline balloon from 360 gigawatt-hours (GWh) at the start of Biden’s presidency to 1310GWh today.

But with Trump likely to increasingly pivot towards fossil fuels, there are concerns for the future of the IRA.

“Donald Trump has reportedly promised to scrap pro-EV rules, mandates, and has regularly criticised the IRA’s tax policy, especially Section 30D, which provides tax credits,” Benchmark policy analyst Bryan Bille said.

Trump’s Republican party has secured a majority in the Senate and is edging closer to a majority in the House of Representatives, which would strengthen Trump’s ability to overturn more legislation.

But Trump faces resistance to push too hard against the IRA.

“Mainly Republican states have significantly benefited from clean tech investments resulting from the Inflation Reduction Act,” Bille said. “Watering down or cancelling these investments would affect the US’ catch up efforts vis-a-vis China.”

According to Benchmark, not only are 92 per cent of IRA investments in Republican states, but 69 per cent of gigafactory development is planned for red states. Texas, for example, is a Republican stronghold and holds the largest gigafactory pipeline of any US state.

It comes as stocks and commodities feel the pinch of Trump’s election win and a subdued China outlook, with market uncertainty seeing copper and iron ore prices fall.

COMEX copper futures have fallen five per cent in the five days, while seaborne iron ore out of Australia retreated to $US101 per tonne on Monday, according to Mysteel.

While the Chinese Government announced $US1.4 trillion ($2.1 trillion) of stimulus last week, little of it will benefit commodity demand, with much of it seen as finance to support a heavily indebted local economy.