What will the US election mean for Europe’s green economy?

As election day approaches in the US, European investors are worried about the future of America’s green economy.

The US and UK are now key markets for European hybrid and electric vehicles. Exports soared from just 2 per cent in 2017 to 26 per cent in 2023 and are now thought to be worth almost €7 billion.

Donald Trump has proposed a 10 per cent import tax on all foreign-made goods and a 100 per cent tax on all imported vehicles if he wins the election.

Investors are worried that this pledge could threaten the growth of the electric and hybrid car market while increasing the already-growing competition from Chinese products.

European products are already at a disadvantage to those made in the US, which benefit from massive subsidies brought in by the Inflation Reduction Act.

‘If the US stops supporting electric vehicles, it will be a big problem.’

The Inflation Reduction Act, signed by President Joe Biden in 2022, poured $220 billion (€202 billion) into clean energy.

The landmark climate law saw sales of US-made electric vehicles soar by 55 per cent in one year, driven by tax cuts and federal incentives. This law extended tax credits: up to $7,500 (€6,877) for buyers of qualified, new clean vehicles and up to $4,000 (€3668) for the purchase of used clean vehicles.

The Inflation Reduction Act is the most significant action the US Congress has taken on clean energy and climate change in the nation’s history. However, the green transition is still incipient, and the US electric vehicle market is not yet stable.

“It’s going to take at least until 2030 to make it easier to buy these vehicles and provide system support,” says Lew Fulton, director of energy futures at the University of California Davis.

“We have at least five more years before the market stabilises. If the US stops supporting electric vehicles, it will be a big problem.”

Harris has indicated that she plans to continue supporting the Inflation Reduction Act if she wins, keeping up support for US-made green technologies.

Trump is not a fan of the climate law and has said he will dismantle it while rescinding all unspent funds under the “misnamed Inflation Reduction Act”.

Some investors have plans to move to the US

Continued support for the Inflation Reduction Act and the stabilisation of the US market are likely to make buying green tech from Europe more expensive. With imported EVs making up 30 per cent of the US electric vehicle market, Trump’s planned import taxes would also likely to impact European manufacturers.

Some European investors already have plans to move to the US. Italian entrepreneur Elyn Flyger is one of them. Her Moderna-based company, Pinpoint, uses artificial intelligence to cut energy consumption.

“It is true that now, with the elections, there are some concerns that this might change the United States,” Flyger says, “but I also think that the ball is kind of rolling. No administration can stop this.”