This is the first of eight articles in the Investing in America 2024 special report that will publish in full on Tuesday 10 December
The economic legacy of Joe Biden’s four-year presidency is tied up with two initiatives that repudiated American free-market orthodoxy, and embraced industrial policies that would once have been shunned in Washington as European-style central planning.
The Inflation Reduction Act and the Chips and Science Act — laws that Biden signed in 2022 — were measures the White House argued would reindustrialise the economy and put it on a stronger competitive footing with China, by providing more than $400bn in federal support to green industries and the semiconductor sector.
As Biden leaves office, that legacy is at risk.
The Financial Times has identified nearly 200 large-scale manufacturing projects that were launched since the laws’ passage two years ago, spanning the production of electric vehicles, batteries, solar panels and semiconductors. But President-elect Donald Trump has vowed to dismantle significant parts of both laws, raising the question: have Biden’s signature economic policies lived up to their billing — and what will happen if the new administration unwinds them?
$400bn in manufacturing dollars
Companies have committed nearly $400bn in clean tech and semiconductor manufacturing investments since the passage of the IRA and Chips Act, potentially creating at least 135,000 new jobs. Of those commitments, the FT analysed projects larger than $100mn, from August 2022 to the eve of November’s election day, and found that they have begun to make their mark on the economic landscape.
Chipmakers have made the biggest manufacturing commitments. In March, Intel said it would spend $36bn to modernise its operations in Hillsboro, Oregon — the largest announcement the FT tracked this year — followed by Taiwan Semiconductor Manufacturing Company’s decision to invest an additional $25bn in Phoenix, Arizona.
“It wouldn’t have happened without Chips,” says Scott Gatzemeier, corporate vice-president at semiconductor maker Micron Technologies. “I spent my entire career in semiconductors, and I didn’t think we’d see large-scale manufacturing back to the US.” Micron is undergoing a $15bn expansion in Idaho and plans to invest $20bn in New York by 2030.
The US south-east and Midwest are the regions that have most benefited. Georgia and South Carolina each saw 19 different projects unveiled, followed by Michigan with 14 project commitments.
Although most projects have yet to enter production or appear in manufacturing employment data, they have already triggered a surge in construction spending. US Census data shows that private spending on manufacturing construction reached an all-time high of $238bn in June — nearly double the spending when Biden signed the laws in August 2022, and construction jobs sit at record highs.
“We’re at the cusp of transformation,” says Scott Paul, president of the Alliance for American Manufacturing.
South Korea and Japan drive the buildout
The IRA and the Chips Act have also trigged an influx of foreign direct investment — a rush that has been hailed by US state and local authorities even as it has sparked ire back in manufacturers’ home countries.
Although the biggest dollar value of investment commitments has come from Taiwan, the FT analysis found that South Korean and Japanese companies are behind the greatest number of projects. The FT tracked 28 project announcements from Korean companies and 16 from Japan.
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While Japan has retained its title as the largest foreign investor in the US, the South Korean commitment has allowed the country to become the leader in so-called greenfield investments — projects that create new facilities and jobs, rather than acquiring existing facilities. Last year, US project commitments from Korean companies totalled $21.5bn, marking the first time in more than a decade that South Korea has secured the top spot for new facilities, according to data from the UN.
“Korea and Japan can fight it out for bragging rights, but it’s just telling that we’re seeing this renewal in investments, in part because of the geopolitical competition between the US and China,” says Andrew Yeo, SK-Korea Foundation Chair at the Brookings Institution’s Center for Asia Policy Studies.
About 80 per cent of announced projects from Korean and Japanese companies are in the electric vehicle and battery sectors, the FT found. While the IRA does not discriminate against companies as long as they build facilities in the US, the law excludes electric vehicles with ties to Chinese companies from qualifying for its signature $7,500 consumer tax credit.
Last year, top commitments from Japan and South Korea included an $8bn expansion of Toyota’s electric vehicle battery plant in North Carolina — the largest investment by a foreign carmaker since the enactment of the IRA — and a $4.3bn investment by Hyundai and LG Energy Solution to manufacture battery cells for Hyundai’s electric vehicle plant in Georgia, the largest economic development project in the state’s history.
“The US doesn’t want to be sourced from China any more,” observes ChiHwan Kim, chief executive of Samkee, a Korean auto components supplier, which recently opened its first factory in Tuskegee, Alabama. “This is giving Korean companies an opportunity to become US suppliers.”
Although China dominates the production of clean technologies, less than 5 per cent of all investments have come from Chinese companies, the FT found. And those that have made commitments have come under intense scrutiny. Illuminate USA, a solar manufacturing joint venture between Chicago-based Invenergy and China’s Longi in Ohio, for example, has been accused of serving as a bridgehead for the Chinese Communist party by a local opposition group.
In August, a bipartisan group of US lawmakers introduced a bill to restrict Chinese solar companies from qualifying for IRA manufacturing tax credits. Since then, Trina Solar, a large Chinese manufacturer, has sold its Texas factory to Norwegian start-up Freyr, in a move analysts saw as a way to insulate the project from future Chinese crackdowns.
Where the rubber meets the road
How many of these 200 projects will come to fruition and achieve full operation remains uncertain. An FT investigation in August found that 40 per cent of projects announced within the first year of the IRA and Chips Act have been paused or delayed.
Since that finding, there have been more setbacks. In August, Swiss manufacturer Meyer Burger abandoned plans to build a $400mn solar cell factory in Colorado Springs, despite announcing it would prioritise the US over Europe for growth.
Then Freyr suspended a final investment decision on its $2.6bn battery factory in Coweta, Georgia, where the state and local governments had set aside more than $350mn in incentives to land the project.
Sarah Jacobs, president of Coweta County’s economic development authority, told the FT last year that Freyr’s project would bring “industrial diversity” to the area and offer jobs paying more than double the county average. “This is the kind of project you want to attract,” she said.
But Evan Calio, chief financial officer of Freyr, says the company is now prioritising its Texas solar acquisition, where technology will be licensed from Trina and products will be sold under the Chinese brand. Higher interest rates are making it difficult to finance new plants, the company says.
“The financeability of that [Georgia] project, for anybody, is just not there in the current market,” Calio adds.
Higher interest rates are not the only problem facing corporate investors. Overproduction in China, softening electric vehicle demand and slower-than-expected rollout of government funding have all had an impact.
The lithium industry, central to the manufacturing of batteries, is a case in point. In November, Kent Masters, the chief executive of North Carolina-based Albemarle, the world’s largest lithium producer, told the FT that a “pivot to the west” was not economically viable due to the fall in lithium prices driven by excess capacity in China and high operating costs.
“We were trying to pivot to the west . . . the prices we see in the market don’t really allow us to do that,” Masters said. Earlier this year, the lithium producer paused its $1.3bn refining project in South Carolina to serve the domestic electric vehicle market.
While the IRA included tax credits to encourage non-Chinese sourcing and a domestic buildout, Albemarle says the federal support has not yet trickled down to the minerals sector.
Will Trump be the death knell?
Perhaps the biggest uncertainty is the election of Trump and a Republican Congress. The IRA passed in 2022 with no Republican support, and the GOP has made 54 attempts to repeal the climate law since its enactment, according to Climate Power, a clean energy campaign group. Trump has vowed to “terminate” the IRA on the campaign trail, calling the law a “green new scam”.
While the Chips Act passed with some Republican support, Trump has also been a critic.
“That chip deal is so bad . . . When I see us paying a lot of money to have people build chips, that’s not the way,” Trump said in an October podcast with Joe Rogan, where he argued tariffs were a better alternative to incentivise chip and automakers.
Chips Act awards are binding contracts and can be rescinded only if a company is not in compliance with the agreement or through an act of Congress. So far the programme has finalised six awards, including more than $11bn in funding to TSMC.
But Lael Brainard, Biden’s chief economic adviser, believes many Republicans now see the benefit of both laws. The industrial policies “have unleashed a manufacturing renaissance,” Brainard argues, and many Republican leaders “have recognised the importance of the investments”.
“There’s an emerging consensus in favour of having a more active role in sectors that are strategically important to our future,” Brainard told the FT.
Approximately 88 per cent of available funding in the IRA has been awarded, and 78 per cent of funding in the Chips Act, a White House official said. The White House has tracked $694bn in clean energy and semiconductor investments since the two laws were enacted.
And the GOP has growing political reasons to support the projects. Three-quarters of all manufacturing investments announced since the IRA and Chips Act have headed to Republican-controlled districts, according to the FT’s analysis. Sixty five per cent are located in counties that voted for Trump, with Trump polling better in about 80 per cent of those regions than he did in 2020.
In August, 18 congressional Republicans wrote a letter to Mike Johnson, the Republican Speaker of the House, urging him to preserve the IRA, calling a full repeal “a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return”.
“I don’t think any president would want their legacy to be half built factories because of a policy change,” says Paul of the Alliance for American Manufacturing.
Post-election uncertainty has prompted some manufacturers to put plans on hold, with the FT tracking at least half a dozen projects hitting pause since Trump’s victory, including Heliene’s $150mn joint venture to produce solar cells with Indian manufacturer Premier Energies.
“Certainty and predictability during the transition are critical to avoiding delays and allowing for projects in the current pipeline to continue,” says Greg Brabec, an adviser to clean tech manufacturers. “Any delay in projects reduces the value of tax credits . . . and could threaten associated manufacturing jobs.”
If federal support remains intact, the ultimate irony could be that Biden’s manufacturing renaissance is credited to Trump. The vast majority of the projects tracked by the FT remain press releases and construction sites and will not come online until the latter half of this decade.
“If Donald Trump does not repeal these clean energy policies, and if he wants to take credit and embrace America’s role as a clean energy leader, I think that’s positive for the future of the industry,” says Andrew Reagan, executive director of Clean Energy for America, which in October co-launched a six-figure ad campaign in support of vice-president Kamala Harris.
“I would say, ‘Take all the credit you want’ to president-elect Trump,” Reagan adds. “I hope he does.”
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