Washington’s ‘back and forth’ tariff moves have created confusion among targeted countries as much as within US business circles.
And on another front, the administration’s stance on infrastructure investment is raising questions for the project logistics sector.
The shift in priorities that came with the change of the guard in Washington – arguably most prominently in energy policy – has left people wondering about the outstanding infrastructure funding the Biden administration had set in motion.
The new president wasted no time in shifting priorities, with the signing of the Unleashing American Energy executive order on his first day in office – that included a hard stop on funding of projects associated with clean energy.
“All agencies shall immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 or the Infrastructure Investment and Jobs Act,” the order said with regard to ‘green’ projects. However, there was no clear definition of such projects, leaving expectant recipients wondering if the undertakings they had set in motion would go ahead.
In a letter to the Department of Transportation, Congressman Greg Stanton from Phoenix expressed worries that state and local governments could end up responsible for hundreds of thousands, if not millions, of dollars planned for projects now deemed not viable by the federal government.
The government has already clawed back $20bn in funding for greenhouse gas reduction projects given the green light, and state officials have been lobbying hard to get these funds allocated to other infrastructure projects, such as road and bridge repairs.
Through the first three years of the $1.2 trillion infrastructure funding legislation, Washington had doled out $570bn by mid-November, with the lion’s share, $389.1bn, having gone to transport-related projects, followed by the energy sector’s $48.8bn.
For the remainder of the five-year period, which ends on 30 September next year, this leaves $50.6bn for competitive grant programmes for the transport sector, plus another $150.7bn to be awarded directly or by formula.
The government has not said if it intends to spend the full allocations set by its predecessor , but indicated some shift in the balance.
On its website the DoT announced last month that “there is a nationwide backlog of projects to repair roads and bridges and improve safety and economic competitiveness. Because of the funds in the infrastructure law, the US Department of Transportation is now funding more of these projects via our competitive grant programmes, and we are providing states, tribes, US territories and local governments far more funding to deliver projects as well”.
So far there have not been reports of infrastructure project cancellations unrelated to alternative energy issues.
“It’s too early to tell is there’s going to be a pullback on infrastructure projects,” one project forwarder executive said privately. He added that, on the other hand, the government had acted quickly to give the green light to plans in the oil and gas sector that had been put on hold by the previous administration.
However, it appears that the zeal of the new administration to move quickly on its mission to cut waste in government might slow down the permit process for new projects, including work in the oil and gas sector.
The summary layoffs implemented by the DOGE task force led by Elon Musk has reduced the number of people working on permits for infrastructure projects. An estimated 20,000 federal employees have been laid off and another 75,000 have taken early retirement.
At the Bureau of Land Management at least 250 jobs have disappeared, media reported, adding that there is a backlog of permits for drilling applications and energy infrastructure projects.
Tariffs may complicate things further, as they push up the cost of components and machinery sourced internationally.
“If you need a tunnel-boring machine, you need to go outside the US,” one forwarder executive commented, adding that the majority of transformers deployed in the US have been imported.
