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But tariff-related price pain could still be coming for the Northeast and Upper Midwest.
On logging in national forests, fires in the Carolinas, and fusion
Are these minerals even economically viable?
Uncertainty about Congress and the Trump administration has investors a little shook.
Core inflation is up, meaning that interest rates are unlikely to go down anytime soon.
What we don’t know about Elon Musk’s federal takeover
The political marriage of President Donald Trump and Elon Musk, the EV mogul and world’s richest man, has significantly changed the outlook for what the Trump administration might mean for energy policy, decarbonization, and the rule of law.
Musk has taken over numerous offices responsible for crucial functions within the federal government, including the Office of Personnel Management at the White House. Musk has snatched control of the federal government’s payments system, and he and his team have illegally tried to use it to block payments to federal programs, according to CNN and The New York Times. Conservative budget experts say that such a move violates the Constitution, which grants sole control over the power of the purse to Congress.
What’s the issue? The problem here is not primarily that Musk is unelected — there are lots of powerful people in every administration who are not elected (though few have ever had as many conflicts of interest as Musk, the CEO of the world’s most valuable automaker in Tesla and the holder of many government contracts via the rocket company SpaceX and satellite internet provider Starlink). Nor would it be a problem if Musk were merely trying to modernize the government’s IT systems.
The problem is that Musk has used his control of a technical system — the software that the government uses to send more than a billion payments a year — to assert effective control over federal programs and policies. This is why Musk trying to shut off payments that have been appropriated by Congress matters: He is in essence saying that because he can do something with the software, he may do it.
The issue is that the government can do many things that it broadly does not do because they are illegal.
But Trump and Musk together are now testing the limits of the law.
The Trump administration is operating on a legal theory that the president can simply decide not to spend money that has been appropriated by Congress. Key officials in the Trump administration argue that Congress sets a ceiling, but not a floor, when it appropriates federal funding. It also believes that the Impoundment Control Act of 1974, which Congress passed during the Nixon administration, is unconstitutional.
I find it hard to believe that the Supreme Court — which last year severely limited the executive branch’s ability to interpret congressional laws which create and govern agencies — agrees with Trump that the president can ignore those same laws when they govern federal spending. But the Court has reached shocking decisions on Trump’s behalf before.
Trump’s team seems to be trying to make this legal theory central to how his entire administration works. Impoundment underpinned the White House’s attempt last month to block all outgoing federal grants and loans, which briefly threw the government into chaos before it was blocked by a judge and ultimately rescinded.
Musk’s ploy, seemingly, is to move so fast that these legal and constitutional questions become moot. If he can close a federal agency’s offices, put its workers on leave, and cut off funding to its programs, then perhaps it won’t matter what a judge says about impoundment itself. And if Musk can control the tap of public money, turning it on and off at will, then he can usurp the operation of the United States government.
In the world of climate and energy, Musk’s prominence — and the lack of precedent for his situation — raises important questions for businesses and policy makers. Here is what we do not know about Musk today:
In 2010, the federal government issued a $465 million loan to Tesla so that it could build a factory in California for its Model S sedan.
In recent years, the government has made similar deals, lending tens of billions of dollars to other companies that make electric vehicles or that mine and refine critical minerals.
Last month, the Biden administration closed a $6.57 billion loan to Rivian, the electric truck maker, so that it could build a new factory in Georgia.
Some of these new borrowers, including Rivian and legacy automakers like Ford, compete with Tesla. It is still unclear whether Musk will be able to use his control of the federal government’s checkbook to cut off some loans and allow others to proceed. Doing so would ultimately stifle competition in the EV sector, benefitting Tesla, where Musk remains CEO.
The White House said this week that Trump is allowing Musk to police his own conflicts of interest.
In December, Musk called for Congress to “get rid” of the clean energy tax credits created by the Inflation Reduction Act.
Most tax credits are claimed by companies against what they owe on their taxes, meaning that they result in negative revenue to the government. But the IRA created a new kind of credit — a so-called “direct payment” — that allowed states, schools, churches, tribes, and other entities without federal tax liability to claim money for installing clean energy or buying electric vehicles.
Those payments — and any other tax refunds — ultimately run through the Treasury Department’s computer systems. It remains unclear whether Musk can use control of the federal government’s checkbook to block the payout of these payments.
One of Musk’s initiatives, the U.S. DOGE Service, is housed at the General Services Administration, or GSA.
The GSA is the government’s internal landlord and facilities manager — it owns, builds, and manages federal office space. It also operates parts of the federal vehicle fleet.
Under the Biden administration, it undertook a number of energy sustainability and efficiency initiatives. Some of these programs were canceled by President Trump’s initial set of executive orders, but the full scope of Musk’s authority in the agency remains unclear.
Last year, the U.S. military was investigating whether Elon Musk complied with the rules of his security clearance, according to The New York Times.
At the time, Musk’s rocket company, SpaceX, had already declined to pursue the highest level security clearance for Musk, in part because of reports around his open drug use and contact with foreign leaders, according to The Wall Street Journal. Musk is reported to hold a “Top Secret” clearance.
The Journal has also previously reported that Musk conducted secret conversations with Vladimir Putin and that Musk’s drug use worries Tesla and SpaceX executives.
Tesla has deep ties in China. It achieved record sales in China last year, although its market share has fallen as Chinese EV companies have out-competed its aging vehicle line-up. Tesla is reportedly opening a new factory in Shanghai this month. Musk has also staked out public positions that favor the Chinese Community Party’s views. In 2022, he suggested that Taiwan could become a “special administrative zone” of the People’s Republic of China.
It’s unclear how these commitments might affect his work for the U.S. government.
Rob and Jesse talk with former Ford economist Ellen Hughes-Cromwick.
Over the past 30 years, the U.S. automaking industry has transformed how it builds cars and trucks, constructing a continent-sized network of factories, machine shops, and warehouses that some call “Factory North America.” President Trump’s threatened tariffs on Canadian and Mexican imports will disrupt and transform those supply chains. What will that mean for the automaking industry and the transition to EVs?
Ellen Hughes-Cromwick is the former chief economist at Ford Motor Company, where she worked from 1996 to 2014, as well as the former chief economist at the U.S. Department of Commerce. She is now a senior visiting fellow at Third Way and a senior advisor at MacroPolicy Perspective LLC.
On this week’s episode of Shift Key, Rob and Jesse chat with Ellen about how automakers build cars today, why this system isn’t built for trade barriers, and whether Trump’s tariffs could counterintuitively help electric vehicles. Shift Key is hosted by Jesse Jenkins, a professor of energy systems engineering at Princeton University, and Robinson Meyer, Heatmap’s executive editor.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.
You can also add the show’s RSS feed to your podcast app to follow us directly.
Here is an excerpt from our conversation:
Jesse Jenkins: I hear often that we’re also sending parts back and forth as well — that particularly near the border with Canada, we have manufacturing parts suppliers on both sides of the border. So it’s not just the final car, it’s also pieces of the car going back and forth. How does stuff move around in this sort of complicated trade network between, Canada, the U.S., and Mexico?
Ellen Hughes-Cromwick: There is a lot of back and forth, and as you mentioned, a lot of the automotive analysts track the travel of not just the vehicles, but the parts. And the latest estimates show that in some cases, we’re going back and forth across the Ambassador Bridge here in Detroit, you know, six, eight times.
So when you say all of a sudden, as of tomorrow, I’m going to put a 25% tariff on that — I mean, that basically shutters businesses. You can’t absorb a 25% hit, especially if it’s a part or an assembled vehicle. Part of that 25% you could probably absorb, but for the thin margins that parts suppliers work for day in and day out, I mean, there’s just no way. You’re better off shuttering your business. I hate to say that, but you know, you just can’t make the equation work, with a 25% hit.
Jenkins: So this is hypothetical structure, I don’t know if this is exactly right, but so you might have engine parts manufactured in Michigan being sent to Windsor, Ontario to assemble an internal combustion engine. And then it goes back to a plant somewhere else in the U.S. to be assembled into a vehicle. Maybe you get the glass from somewhere for the windows, you know, these are all moving back and forth on a regular basis after so many years of free trade agreements between the two countries, or the three.
Hughes-Cromwick: That’s right. That’s right. And again, coming back to Michigan, because we’re so close to the suppliers in Canada, and we have the lion’s share of automotive suppliers, especially small and mid-size suppliers — so the tier two, tier three. They’re supplying to a tier one big supplier like Magna or Borg.
So you’ve got a lot of these tier two, tier three suppliers in Michigan. Well, why? Because they’re getting a part from a Canadian supplier, putting it into theirs. And maybe that’s a component that goes into an internal combustion engine that’s being produced.
This episode of Shift Key is sponsored by …
Download Heatmap Labs and Hydrostor’s free report to discover the crucial role of long duration energy storage in ensuring a reliable, clean future and stable grid. Learn more about Hydrostor here.
Music for Shift Key is by Adam Kromelow.
