During his presidential campaign, Donald Trump consistently highlighted the economic struggles facing American households, including rising fuel prices and a broader cost-of-living crisis. He positioned energy policy as a key tool to address these challenges, advocating for domestic energy production, deregulation, and “America First” initiatives.
This message resonated strongly with voters, and economic data underscored their concerns. From late 2021 until the 2024 election, average gas prices across the US exceeded the highest levels observed during Trump’s first term (2017–2021), according to Federal Reserve Economic Data (FRED).
More broadly, largely as a result of the inflation spike, real compensation per hour declined by 5.2% during President Biden’s first term, marking the worst performance since the Second World War as recorded by the Bureau of Labor Statistics (BLS) data. In contrast, Trump’s first term saw real compensation per hour grow by 12.8%, one of the most significant increases in the postwar era. Such trends not only validated his campaign rhetoric but also amplified calls for a return to his policies.
Despite falling in the IMD Competitiveness Rankings, the United States has an advantage over other developed nations: its energy prices are significantly lower, particularly compared to the European Union. This cost advantage could help the US become more competitive again. In 2024, for instance, wholesale gas prices in the EU were nearly five times higher than in the US, while industrial electricity prices were roughly two and a half times greater. Consequently, the energy policy of the new Trump administration is drawing considerable attention not only from US voters but from businesses worldwide.
On his first afternoon in office, President Trump declared a “national energy emergency” to expedite the development of fossil fuel infrastructure.
To address voter concerns over high fuel costs, the incoming Trump administration is poised to prioritize domestic oil production as a key pillar of its energy agenda. Central to this strategy is reversing environmental regulations implemented during the Biden administration.
On his first afternoon in office, on January 25, 2025, President Trump declared a “national energy emergency” to expedite the development of fossil fuel infrastructure. This executive order aims to streamline regulations and remove barriers to energy production, thereby promoting increased oil and gas extraction. This move is supported by industry leaders who anticipate faster project approvals and reduced regulatory hurdles (Dallas Fed Survey 4/2024). These measures aim to stabilize gasoline prices while creating jobs in the energy sector.
On the same day, President Trump signed an executive order allowing oil and gas exploration in the previously protected Arctic National Wildlife Refuge. These initiatives were stalled during the previous administration, but the Trump team views them as critical for boosting domestic production and reducing reliance on imports.
The “Project 2025” blueprint – a set of proposals from the Heritage Foundation, one of Washington’s most prominent right-wing think tanks – echoes these priorities, emphasizing that reliable and affordable fossil fuels are essential for economic resilience. The report calls for repealing “restrictive” policies like the Inflation Reduction Act, which it argues distorts energy markets by over-subsidizing renewable energy at the expense of traditional energy sources. (Project 2025: Energy Chapter).
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In addition to oil production, liquefied natural gas (LNG) policy will likely play a pivotal role in Trump’s energy strategy. The US has emerged as the world’s largest LNG exporter, with volumes growing from one billion cubic feet per day (Bcf/d) in 2016 to nearly 12 in 2023, according to the Department of Energy (DOE Report: Energy, Economic, and Environmental Assessment of US LNG Exports).
These exports have become a geopolitical tool, providing energy to allies in Europe and Asia and reducing reliance on adversaries like Russia. However, the rapid growth in LNG exports has also driven up domestic natural gas prices, adding to the cost-of-living pressures on US households.
Addressing this dual impact will require multiple policy interventions, it is argued. Project 2025 highlights the need to align LNG export strategies with national security goals while ensuring that domestic energy remains affordable. It critiques current regulatory barriers for delaying export approvals and recommends streamlining licensing processes to boost both production and exports. At the same time, it calls for investments in infrastructure, such as pipelines and LNG facilities, to improve efficiency and lower costs for domestic consumers (Project 2025: Energy Chapter).
As Trump noted during his campaign, ensuring affordable energy “for the people who matter most: hardworking Americans” will remain a central focus of his policies. More affordable energy will also directly reduce production costs for US manufacturers, giving them a competitive edge in global markets. Lower energy prices also enable businesses to invest more in innovation and expansion, further strengthening the US economy.
The incoming Trump administration is also expected to bring significant shifts in the areas of renewable energy and electric vehicles (EVs). Throughout his campaign, Trump criticized the Biden administration’s subsidies for renewable energy and electric vehicles, framing them as distortions of the energy market that increased costs for American consumers. He has also expressed skepticism about the viability of wind and solar power, going as far as to call wind turbines “garbage” during a recent press conference. These remarks signal an imminent rollback of federal incentives for renewables.
Electric vehicles face a particularly uncertain future under the Trump administration. During his campaign, Trump targeted EV subsidies as an example of government overreach and indicated that such incentives should be scaled back or eliminated altogether. This has created significant apprehension among automakers, with some already reassessing their EV strategies and market forecasts for the coming years.
Adding complexity to this issue is the influence of mega-donor Elon Musk, whose wealth is deeply tied to the value of Tesla. Musk’s outsized contributions to Trump’s campaign have raised questions about whether his interests might shape the administration’s EV policies. While Musk has championed clean energy and EV expansion, his support for Trump could push the administration to adopt a more nuanced approach, balancing Musk’s business interests with Trump’s stated preference for market-driven energy solutions.
The EV market has seen substantial infrastructure investments in recent years. The National Electric Vehicle Infrastructure (NEVI) initiative was established as part of the Infrastructure Investment and Jobs Act (IIJA) and signed into law in November 2021. The NEVI program, managed by the Federal Highway Administration (FHWA), was launched to accelerate the development of a nationwide EV charging infrastructure network. The program allocated $5bn over five years (2022–2026) to states for deploying EV charging stations along designated National Alternative Fuel Corridors.
However, continued progress is in doubt. If federal funding for EV infrastructure and subsidies is reduced, the market could face slower growth, even as private companies like Tesla and its competitors work to fill the gaps. This evolving policy landscape underscores the uncertainty surrounding the future of renewables and EVs in the US. Unless these circumstances change, it is hard to see how American firms can narrow the Chinese lead in clean energy.
In conclusion, the Trump administration’s energy policies, centered on boosting fossil fuel production and lowering domestic energy prices, could significantly reshape global business dynamics. Lowering energy costs in the US will further widen the energy cost advantage over European manufacturers burdened by higher energy expenses. However, the administration’s skepticism toward clean energy and electric vehicles surely weakens US leadership in these rapidly growing sectors, increasing the likelihood that market dominance is ceded to Chinese firms.
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