The US government has various ways to provide financial support to businesses, including large and small, to help them with research and development, expansion, hiring, and paying staff, as well as competing in the global market. However, as of Tuesday evening, all of these means of financial support were in question.
The Trump administration attempted to place an indefinite freeze on federal grants and loan programs on Monday night, leaving many businesses that rely on government support for their plans and activities in a state of uncertainty. The move sowed chaos and confusion across non-profits, local governments, universities, and recipients of federal money.
A federal judge subsequently blocked the move, ruling that “open awards” already granted through at least Monday would remain unaffected. While this provided some relief, it did not address the questions surrounding the future of government grants and loan programs.
The Trump administration’s freeze on financial assistance programs comes at a time when businesses are already facing significant uncertainty. The federal Office of Management and Budget (OMB) issued a memo stating that it would be introducing a “Temporary pause of agency grant, loan, and other financial assistance programs” to ensure that assistance is “dedicated to advancing administration priorities” and “unleashing American energy and manufacturing.”
However, some programs are more likely to face scrutiny, including those related to clean energy and social engineering policies, which the OMB deemed a waste of taxpayer dollars. The status of previously announced loans, such as those for the construction of electric vehicle plants and battery factories, is currently unclear.
The Department of Energy (DOE) has already provided $46.9 billion in funding for “innovative clean energy projects and advanced technology vehicle manufacturing facilities across the United States.” For example, BlueOval SK, a joint venture between Ford and Korean battery maker SK, received a $9.6 billion loan to build three EV battery plants, which are expected to employ 2,500 workers. StarPlus Energy, a joint venture between Samsung SDI and automaker Stellantis, also received a $7.5 billion loan to build two battery manufacturing plants in Indiana.
American automakers rely on federal financial support to compete with Chinese companies, which have received massive support from their government to develop the country’s domestic electric vehicle industry. A letter to Congress from the Alliance for Automotive Innovation stated that the US must “do everything it can to protect its competitiveness in a global marketplace, ensure a level playing field against unfair trade, technology, and subsidy practices.”
The Small Business Administration, the Commerce Department’s Economic Development Agency, and the Export-Import Bank all provide clean energy loans, but none responded to requests for comment on how these programs could be affected by the freeze on grants and loans.
The Trump administration’s move has left businesses “hating” the uncertainty, and the future of government financial support is far from clear. As one business leader said, “If there’s one thing that businesses hate, it’s uncertainty. But it’s the best they have for at least a little while.”
