Tariff Updates: From Chaos to Convention

The future of President Trump’s “Liberation Day” tariffs hit a significant obstacle last week. On May 28, the U.S. Court of International Trade (CIT) struck down core pieces of the so-called reciprocal tariffs, ruling that the President had overstepped his authority under the International Emergency Economic Powers Act (IEEPA) of 1977.  Some of President Trump’s tariffs were unaffected by the ruling, including restrictions on auto imports and steel. Many others were significantly curtailed including the 10% baseline tariffs and those targeting fentanyl-related imports from countries like China, Canada, and Mexico.

This still has some way to go before we know how it ends. However, the initial court ruling makes it more likely the U.S.’s approach to trade will ultimately move from the chaos of the last two months to a more conventional process that the industry has a decade-plus experience navigating. This makes for a less volatile investment landscape, even with heightened tariffs compared to January.

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House Tax Bill: From Politics to Practicalities

The House passed a sweeping tax bill that includes major changes to clean energy tax credits. It marks a significant step in GOP lawmakers’ efforts to move the tax legislation through Congress, but nothing is final and there is a long way to go before anything is signed into law. The tax bill is now with the Senate, meaning Congress still has time to consider the U.S.’s power needs and design policies accordingly. Policy will be most effective if it includes:

• Meaningful and predictable incentives that help investors make decisions about allocating capital and give developers the certainty necessary to build projects;
• “Commence construction” requirements that give investors certainty around the tax credit’s value prior to allocating capital;
• Flexibility, such as that offered by transferability – that streamline investment processes and maximize uptake.

Our full article looks at the House bill’s implications against the backdrop of the current U.S. power system, where meeting rising demand is an imperative.

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At times like these, it is natural for all eyes to focus on Washington D.C. Remember though that investment and procurement decisions are made across the U.S. by companies large and small, based on their needs. A core ethos at Generate is that customers’ needs drive markets. Our expert view this month explores how corporates are making energy and infrastructure business decisions, and what that means for the broader state of corporate decarbonization.

U.S. manufacturing investment is slowing, but still high

Despite some manufacturers across the U.S. pausing or canceling projects amid lingering tariff pressures and federal policy uncertainty, total investment in new plants remains robust. Many projects were already too far along to halt, while others retain conviction in the need for domestic manufacturing. By March 2025, U.S. manufacturing construction spending had climbed to $230 billion, all of which will demand vast quantities of power.

Nat Bullard’s recent Halcyon dispatch teases this out nicely by focusing on one high-profile example: the BlueOval SK battery park, a $5.6 billion joint venture between Ford Motor Company and Korea’s SK Innovation. Sprawling across 1,500 acres and targeting 80 GWh of annual battery output, the plant alone will draw a peak 260 MW in summer and 225 MW in winter once fully built out. It’s not just data centers that need power.

U.S. gasoline sees sustained slowdown

After decades of steady gains, U.S. demand for gasoline is now on a six-year, 5% decline. This is due not only to increasing EV sales, but also the increasing number of hybrid cars on the road and improving fuel economy for combustion engine vehicles (link).

Natural gas industry braces for price volatility

Natural gas analysts at S&P Global Commodity Insights expect volatility in gas prices to increase in the coming years due to a combination of retiring coal-fired power generation capacity, spending discipline among producers, and a change in how gas storage is used. Analysts also raised their US natural gas price outlooks for this year and next on the heels of first-quarter earnings, expecting tighter market conditions because of factors such as rising gas demand and slower production growth.

As of May 15, Henry Hub forwards for the balance of 2025 were $3.93/MMBtu on average, with the 2026 strip at $4.33, according to Platts data. In its latest forecast published May 6, the EIA projected $4.10/MMBtu Henry Hub in 2025 and $4.80/MMBtu in 2026, higher than the $3.10 and $4 gas forecast in January (S&P Global Intelligence).