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The Northeast is in the middle of its first true blizzard in years. That long gap wasn’t because of climate change, though.
Happy blizzard day, Northeast. While you might be (okay, or most definitely are) sick of the snow at this point, take comfort in the fact that this storm is different. It meets the definition of a true blizzard, in which a large amount of snow falls with sustained winds over 35 miles per hour and visibility reduced to less than a quarter of a mile for more than three hours. That’s a mouthful, all of which is to say: Complain away! You’ve earned it!
New York City hasn’t issued a true blizzard warning since 2017 — but that isn’t because of climate change. In fact, big, bad storms like this one might be getting even worse.
I spoke with Colin Zarzycki, an associate professor of Meteorology and Climate Dynamics at Pennsylvania State University, on Monday morning about what we can expect from winter storms in a warming climate. Our conversation has been lightly edited for clarity, and the snow-weary should proceed with caution.
I've read both that blizzards will increase in a warming world because the atmosphere can hold more moisture to make more snow, and also that, because it’s warmer, a lot of the precipitation will fall as rain instead of snow, so the storms will decrease. What does the research actually say?
Let’s back up for one second. Blizzards like we have in the Northeast today are a subset of nor’easters. We also call them mid-latitude or extra-tropical cyclones — you hear people talk about “low pressure,” “bomb cyclones.” At the end of the day, these are synonyms for storms that track up the East Coast of the U.S. and dump a lot of snow, particularly along the major metro corridor.
A blizzard is a special subset, where you have strong winds that blow the snow around. And that’s really problematic, because — have you experienced a lot of snowstorms?
I went to college in Vermont and lived in New York City for 10 years, so I’m familiar with snow.
I ask because, every once in a while, you talk to someone from, like, Miami, and they’re like, “I don’t know what you’re talking about.” But during these strong wind events, blowing snow reduces the visibility. That’s very bad for transportation like aviation, but also just driving on highways and roads.
I want to be careful, because there’s been less work done on the wind side of things. The broad consensus is that if you measure nor'easters as a function of their low pressure — which is somewhat analogous to wind speed; they’re not exactly related, but they’re pretty close — there actually doesn’t seem to be a huge shift. For every storm that comes up the East Coast and turns into a bomb that’s blowing 80-mile-an-hour winds, the distribution of the wind looks pretty similar across different climates, whether cooler or warmer.
What you’re referring to about the precipitation: — this is the thing we’re most confident in the science [of]. If you make the very simple argument — which admittedly, our models indicate it is not a bad argument — that if the number of nor’easters that move up the coast stays relatively constant and the intensity of them doesn’t change a lot as measured by wind speed, but if the atmosphere is warmer and can hold more water vapor, then the rates of what’s coming out of the sky essentially increase.
Now if you’re thinking, “Okay, well, that’s snow,” then yes. If you could take this storm and put it in a time machine and move it 50 years from now, and if the atmosphere is 2 degrees [Celsius] warmer, then you’re going to have more precipitation coming out of the sky, all other things being equal.
But you mentioned the other tricky thing that complicates life. When climate scientists think about precipitation in, let’s say, Florida, where it doesn’t snow at all, it generally all just goes one way: It gets warmer, it rains harder. But in the Northeast, we have two things that compete with each other. On the one hand, precipitation increases, as we just discussed. But then obviously, if it warms, more of these storms are likely to produce rain rather than snow.
If you look at just the average number of snowstorms in a warmer world, whether you’re comparing today relative to 1850, or if you’re looking at today and trying to figure out what’s going to happen in 2100, in general, the warmer it gets, the less total snow and the less total number of snowstorms because more of them become rainstorms. The tricky thing is, the decrease really only happens with the weaker snowstorms, the nuisance types.
So if we still get periods in warmer climates where it’s cold enough to snow, and now we’ve turbocharged the atmosphere’s ability to hold moisture by warming, then what we’ve actually done is make it so that when it does snow, it snows harder. In general, we expect to see fewer overall snowstorms when it’s warming, which is very consistent with what we’ve seen in observations in the Northeast U.S. If you look at any major metro area and you plot snow since 1950 it’s generally been on a downslope. But these big blizzard-type storms aren’t going away.
The jury is out as to whether the most, most, most, most extreme snowstorms become a little more extreme. But the big take-home message is that the frequency of big nor’easters isn’t going away, even if the climate warms.
There has been a lot of talk about this being the first blizzard to hit New York City in nine years. I don’t think I can remember a storm quite like this from when I was living there. Is that because this is the most extreme version you’re referring to, that we haven’t seen as often?
If you were to ask someone who has lived in New York City since the 1950s, they would probably tell you that this is a bad snowstorm, but that they’ve seen similar ones. I’m not an expert on the history of New York City weather, but there were a couple of big storms, I think, in the 1970s that were analogous to this, if not a little worse.
What is unique about this storm is that we really haven’t seen one of these tight coastal blizzards this year. We had that storm that came through earlier this year, which also brought a decent amount of snow to New York, but it tracked across the country rather than forming right off the coast and moving up that direction. This one is dragging snow across New York City and Boston; it’s a very classic Northeastern U.S. blizzard.
I think the main aspect is that we have been in a period of luck. We haven’t had these storms as frequently in the past. Some of it goes to that kind of dice-rolling thing with the temperatures. But if you look over the last 10 years, I would assume it’s not that New York City has been nice and sunny and calm in the winter. It’s that you’ve had these wintertime cyclones, but it’s been a lot more rain, or wet, rainy, sleety snow. It hasn’t been cold enough air to really lock in the blizzard conditions.
My understanding is that blizzards are specific atmospheric events in which the wind speed must exceed 35 miles per hour and visibility is limited. How difficult is that to capture in the data? I know from my reporting on tornadoes that it can be really difficult to capture wind events. How do you study this?
The fancy word in climate science is “compound extremes,” and a blizzard is a form of a compound extreme where you have multiple hazards at the same time. Add one layer on top of another, and the more there are, the harder it is to get information out of the data.
Especially in densely populated areas like the Northeastern U.S., blizzards are fairly tricky to look at. When you read the National Weather Service’s definition of a blizzard, it’s like, “It has to be snowing, and you have to have sustained winds, and you have to have decreased visibility.” All of those mean you’re adding layers of complexity to the data.
Tornadoes are a little similar; they’re a discrete phenomenon, and you need specific ingredients to all line up, and there’s also an observation problem. It’s somewhat analogous to blizzards: I could be at JFK Airport in New York, which is right on the ocean. There’s not a lot in the way to slow down the winds. Especially if you have drier snow, it’s very easy for it all to blow around. If I’m a guy working at JFK, I’m saying, “This is really bad, it’s really windy, the snow is coming down, and we can’t see anything. We have to shut everything down.” But put yourself in Midtown or somewhere where you’re surrounded by buildings and a little further away from the ocean, then suddenly the winds might be reduced because you have more obstacles that can slow it down. You’re experiencing the exact same storm, but the impacts are very different.
You said at the beginning that the underlying assumption is that nor’easters will continue at the same rate they’re happening now. Is there anything I should know about the way climate change is impacting those events?
Precipitation is the main thing. There’s been some work on the frequency and track of the storms, and we’ve seen small changes. But we also have a sample-size problem. The more you want to focus on the intense storms, the less you have in your records, and the more challenging it is to tease out what’s going on. That’s one of the reasons I really like models.
So maybe, if you squint, you can see some small changes in the frequency or the track, but it’s on the order of 5% to 10% per year. But the number of nor’easters we actually get in a given winter is not small; depending on how you want to classify it, it’s something like 10 to 15 any given winter. They don’t all produce a lot of snow; some of them go offshore, and if you’re sailing a boat in the middle of the ocean, then you’d be like, yeah, this is a big problem. But generally, we have very high confidence in understanding the precipitation, and decent confidence in understanding how the rain-snow partitioning changes. The winds, I think, are kind of an open question. But we’re talking secondary effects relative to the precipitation for all of them.
Is there anything else I should know about blizzards and climate change?
I do interviews every winter about bomb cyclones and big storms. The fact that I do multiple interviews a winter implies that the storms themselves are not anomalous. If you actually count them, you end up with a decent number. You just need the dice to come up snake eyes — all the ingredients need to line up for it to be something impactful. And that’s what’s happening now.
What climate change does is change the underlying probabilities and distributions. But at the end of the day, the main thing that actually drives what’s going on with these storms is, can the atmosphere put the Lego pieces together for these impacts? Every cyclone that we get during the winter, if you go back and look at the historical record, there’s plenty of evidence for these types of storms.
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On the California atom, Russian nuclear theft, and Taiwan’s geothermal hope
Current conditions: A blockbuster blizzard blanketed the Northeast in up to 2 feet of snow, trigger outages for nearly 500,000 households • Hot, dry Harmattan conditions are blowing into Nigeria out of the Sahara, leaving the capital, Abuja, and the largest city, Lagos, roasting in nearly 100 degrees Fahrenheit • Much of South Australia, the Northern Territory, and Victoria are bracing for severe thunderstorms and flooding.

By the end of this year, U.S. developers are on pace to add 86 gigawatts of new utility-scale generating capacity to the American grid. Just 7% of that will come from natural gas. The other 93%? Solar, batteries, and wind, according to the latest inventory by the Energy Information Administration. Utility-scale solar projects alone will provide 51% of the new generating capacity, followed by batteries at 28%, and wind at 14%. Critics of renewables, such as Secretary of Energy Chris Wright, would point out that generating capacity does not equal generation, and that as has happened recently, gas, coal, and nuclear power may well end up pumping out a lot of the electricity this year. But rapid expansion of renewables and batteries comes largely despite the Trump administration’s efforts to curb the growth of what top officials dismiss as “unreliable” sources of power. Surging electricity demand from data centers has left gas turbines backordered; geothermal plants are still at an early stage; and new nuclear reactors are still years away. That makes solar and wind, already some of the cheapest sources to build, the only obvious options to bring new generation online as quickly as possible. In a sense, Trump may have helped nudge 2026’s boom into existence by phasing off federal tax credits for renewables this year, spurring a rush to get projects started and lock in the writeoffs.
That doesn’t mean the solar, battery, and wind sectors aren’t facing steep challenges. Just last week, Heatmap’s Jael Holzman rounded up four local fights on opposite coasts, including over a big solar farm in Oregon.
California could consider building anything from a large-scale Westinghouse AP1000 to a next-generation microreactor if a new bill to clarify the state’s ban on new nuclear power plants passes into law. On Friday, Assemblymember Lisa Calderon, a Democrat from Southern California, introduced AB2647 to modify the state moratorium put in place in 1976, three years before the Three Mile Island accident, to allow for construction of modern nuclear reactors. The legislation would exempt all reactor designs certified by the Nuclear Regulatory Commission after January 1, 2005. That clears the way for an AP1000, which was approved in 2006, and today is the only new design in commercial operation in the U.S., or any of the new small modular reactors and microreactors now racing to come to market. The bill is bringing together disparate factions in the California legislature. Progressive Assemblymember Alex Lee co-sponsored the legislation, while Senator Brian Jones, the highest ranking Republican in the state’s upper chamber, is backing a Senate version of the legislation.
Since Friday, I can report exclusively in this newsletter, the bill has two new supporters. Patrick Ahrens, a Silicon Valley-area Democrat, has signed on as a backer, and the Sheet Metal Workers union has said it would support the bill. “Pinching myself,” Ryan Pickering — a reactor developer and Berkeley-based activist who helped lead the successful campaign to cancel the closure of the state’s last plant, the Diablo Canyon nuclear station — responded when I texted him to ask about the bill. “California has an epic history in nuclear energy. We built 11 reactors across this state and once envisioned up to 14 gigawatts of nuclear electricity. This technology is part of our inheritance as Californians,” he said. “Assembly Bill 2647 gives California the opportunity to begin building nuclear energy again.”
If you have ever crossed the Queensboro Bridge from Manhattan’s 59th Street over to Long Island City in Queens, you have no doubt seen the Ravenswood Generating Station. The four candycane-colored smokestacks of New York City’s largest power plant, a more than 2-gigawatt facility equipped to burn both fuel oil and natural gas, rise on the lefthand side of the bridge, looming over the East River. Just a few years ago, its owner, LS Power, envisioned transforming the plant through a subsidiary called Rise Light and Power, which aimed to build a large-scale battery hub fed by new transmission lines connecting the facility to nearby offshore wind farms and onshore turbines upstate. Now, as Heatmap’s Emily Pontecorvo reported in a Friday scoop, the company is selling Ravenswood to the Texas energy giant NRG. It’s not yet clear what the sale means for the so-called Renewable Ravenswood plan, which Emily wrote was already “hanging by a thread.”
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Since the start of its invasion of Ukraine, Russia has maintained clear designs on the Zaporizhzhia nuclear plant. Europe’s largest atomic generating station, located in an occupied province of eastern Ukraine, has been offline for the past four years. But, in a bid to shore up on the Kremlin’s desired war prizes as peace negotiations sputter, Russia’s nuclear regulator Rostekhnadzor has issued a 10-year operating license for Unit 2 of the plant. In its announcement, NucNet reported Friday, Rostekhnadzor said the move would open the door to building more Russian nuclear plants in the region. Rosatom, Moscow’s state-owned nuclear company, has submitted an application for an operating license for Unit 6, and aims to do the same for units 3, 4, and 5 by the end of this year.
The neighboring country most eager to contain Russia, meanwhile, took a big step toward building its first nuclear plant. The Supreme Administrative Court in Poland, whose debut facility is going with American technology, rejected an environmental complaint aimed at halting construction of AP1000 reactors at the site on the Baltic sea.
Earlier this month, I told you about Equinor’s plans to scale back its investments in carbon capture and sequestration, despite Norway’s world-leading progress on pumping captured CO2 back underground. Now the Norwegian energy giant is quitting on one of the European Union’s landmark projects to prove hydrogen fuel can be produced at scale using natural gas equipped with CCS. The company last week abandoned a gigawatt-sized blue hydrogen plant in the Netherlands as demand for the fuel stalls. Some may welcome the blue hydrogen recession. As Heatmap’s Katie Brigham wrote last year, a major blue hydrogen plant in Louisiana had been poised to add more emissions than it saved.
Things are looking sunnier in South America for green hydrogen, the carbon-free version of the fuel made from blasting freshwater with enough renewable electricity to separate out H from H2O. Colombia just completed a feasibility study on the country’s first industrial-scale green hydrogen project, set to generate 120,000 metric tons of green ammonia per year at a remarkably low price, according to Hydrogen Insight. At the opposite end of the continent, Uruguay’s 1.1-gigawatt green hydrogen-fueled methanol plant last week lined up a major offtaker that plans to buy the chemical to make lower-carbon gasoline. The purchaser? A fuel company based in a major artery of European trade, Germany’s Port of Hamburg.
Taiwan is in an energy crisis. The self-governing island, whose “silicon shield” against China is predicated on its capacity to manufacture enough energy-intensive semiconductors to be invaluable to the global economy, shut down its last nuclear reactor last year. By exiting atomic energy while struggling to build offshore wind turbines, the government in Taipei has rendered Taiwan almost entirely dependent on imported fuels. In an age when, as Russia has shown in Ukraine, blackouts are key weapons, the People’s Liberation Army need only make liquified natural gas dangerous to ship through the Taiwan Strait to cause blackouts. But geothermal power, development of which stalled out after the 1970s, offers a unique tool for Taiwan. Located on the Pacific Rim, the island has lots of hot rocks. Now it finally has a growing geothermal industry again, too. The CPC Corporation Taiwan said just before Lunar New Year started last week that it had just started generating power from the 5.4-megawatt Yilan Tuchang Geothermal plant. While small, it’s now the largest geothermal plant in Taiwan.
In this emergency episode, Rob unpacks the decision with international supply chain specialist Jonas Nahm.
The Supreme Court just struck down President Trump’s most ambitious tariff plan. What does that ruling mean for clean energy? For the data center boom? For America’s industrial policy?
On this emergency episode of Shift Key, Rob is joined by Jonas Nahm, a professor of economic and industrial policy at the Johns Hopkins School of Advanced International Studies in Washington, D.C. They discuss the ruling, the other authorities that Trump could now use to raise trade levies, and what (if anything) the change could mean for electric vehicles, solar panels, and more.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.
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 their conversation:
Robinson Meyer: One thing I’m hearing in this list is that there’s five other tariff authorities he could use, and while some of them have restrictions on time or duration or tariff rate, there’s actually still a good amount of like untested tariff authority out there in the law. And if the president and his administration were quite devoted, they would be able to go out there and figure out the limits of 338, or figure out the limits of of 301?
Jonas Nahm: Yeah, I mean, I think one thing to also think about is, what is the purpose of these tariffs, right? And so I think the justifications from the administration have been varied and changed over time. But, you know, they’ve taken in a significant amount of revenue, some $30 billion a month from these tariffs. This was about four times as much as in the Biden administration. And so there is some money coming in from this. And so 122, the 10% immediately would bring back some of that revenue that is otherwise lost. One question is what’s going to happen to refunds from the IEEPA tariffs? Are they going to have to pay this back? It seems like that’s also kind of a court battle that needs to be fought out. And the Supreme Court didn’t weigh in on that. But, you know, the estimates show that if you brought the 122 in at 10%, you would actually recoup a lot of the money that you would otherwise lose and the effective tariff rate in the U.S. Would go back from 10% to about 15%, roughly to where it was before the Supreme Court ruled on it.
Meyer: Has the effect of tariffs from the Trump administration been larger or smaller than what you thought it would be? Not necessarily in the immediate aftermath of “liberation day” because he announced these giant tariffs and then kind of walked some of them back. But the tariff rate has gone up a lot in the past year. Has the effect of that on the economy been more or less than you expected?
Nahm: I think that the industrial policy justification that they have also used is a completely different bucket, right? So you can use this for revenue, and then you can just sort of tax different sectors at different times as long as the sum overall is what you want it to be. From an industrial policy perspective, all of this uncertainty is not very helpful because if you’re thinking about companies making major investment decisions and you have this IEEPA Supreme Court case sort of hanging over the situation for the past year, now we don’t know exactly what they’re going to replace it with, but you’re making a $10 billion decision to build a new manufacturing plant. You may want to sit that out until you know what exactly the environment is and also what the environment is for the components that you need to import, right? So a lot of U.S. imports actually go into domestic manufacturing. And so it’s not just the product that we’re trying to kind of compete with by making it domestically, but also the inputs that we need to make that product here that are being affected.
And so for those kinds of supply chain rewiring industrial policy decisions, you probably want a lot more certainty than we’ve had. And so the Supreme Court ruling against the IEEPA tariff justification is certainly more certainty in all of this. So we’ve now taken that off the list. But we are not clear what the new environment will look like and how long it’s going to stick around. And so from sort of an industrial policy perspective, that’s not really what you want. Ideally, what you would have is very predictable tariffs that give companies time to become competitive without the competition from abroad, and then also a very credible commitment to taking these tariffs away at some point so that the companies have an incentive to become competitive behind the tariff wall and then compete on their own. That’s sort of the ideal case. And we’re somewhat far from the ideal case. Given the uncertainty, given the lack of clarity on whether these things are going to stick around or not, or might be extended forever, and sort of the politics in the U.S. that make it much harder to take tariffs away than to impose them.
You can find a full transcript of the episode here.
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From Heatmap: Clean Energy Looks to (Mostly) Come Out Ahead After the Supreme Court’s Tariff Ruling
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Robinson Meyer:
[1:25] Hi, I’m Robinson Meyer, the founding executive editor of Heatmap News. It is Friday, February 20. This morning, the Supreme Court threw out President Trump’s most aggressive tariffs, ruling that the International Emergency Economic Powers Act of 1977, usually called IEEPA, does not allow the president to impose broad, indiscriminate tariffs on other countries. Had Congress intended to convey the distinct and extraordinary power to impose tariffs, it would have done so expressly, Chief Justice John Roberts wrote. It was a bit of a stitched together decision. Clarence Thomas, Samuel Alito, and Brett Kavanaugh dissented, while Neil Gorsuch, Amy Coney Barrett, and the chief justice ruled with the liberals, although the liberals only concurred with some of the decision. But it takes away a major tool of economic and diplomatic policy making for President Trump.
Robinson Meyer:
[2:12] There were really two sets of tariffs affected by this decision. One was a set of so-called reciprocal tariffs imposed on most countries in the world and set between 10% and 50%. And the second were what Trump called the fentanyl tariffs on China, Mexico, and Canada. Now, the president basically immediately followed up this ruling by saying he would impose a 10% universal tariff on all countries. We’re still trying to understand how exactly he would do that and what it would mean, and we’ll talk about it on the show. But we wanted to have a conversation on an emergency basis here on an emergency shift key episode about what this means for clean energy and what this could also mean for Trump’s industrial policy, such as it is going forward.
Robinson Meyer:
[2:53] Joining us today is Jonas Nahm. He’s an associate professor at the John Hopkins School of Advanced International Studies in Washington, D.C., and he was recently senior economist for industrial strategy at the White House Council of Economic Advisors. He studies industrial policy, supply chains and trade, and he’s the author of Collaborative Advantage: Forging Green Industries in the New Global Economy. Jonas, welcome to Shift Key.
Jonas Nahm:
[3:18] Thank you for having me. I’m finally on.
Robinson Meyer:
[3:20] You’re finally here. We finally got you. So I think let’s just start here. What do you make of the ruling today and then the president’s kind of successive 10% tariff announcement?
Jonas Nahm:
[3:33] I don’t think this was surprising, right? We had, during the hearings, kind of gotten this impression that the judges were somewhat skeptical, at least, of the ability of the president to use IEEPA to justify these tariffs. And so I think the surprise was really that it took so long. There were lots of rumors floating around for the past couple of months that this would come out any time. And so it finally came, but it sort of came in the form that everyone expected. And the conclusion today was that this is not a tariff statute and that there are other authorities for the president to use to do these things, but this isn’t one of them.
Robinson Meyer:
[4:09] I feel like the most interesting thing, I kind of hinted at this in the intro, was that Brett Kavanaugh, ruled, first of all, that the tariffs were legal, which is kind of crazy, but also that he was like, this is not the proper use of the major questions doctrine, a doctrine he invented to constrain executive authority. But that’s neither here nor there.
Jonas Nahm:
[4:28] Which the liberal justices also didn’t sign on to, right? So it was sort of three people saying this is major questions, and then three people saying this is just, you know, illegal.
Robinson Meyer:
[4:39] Yes. And I think maybe crucially for this audience, Justice Gorsuch cited disapprovingly the Trump administration’s argument that a future president could use IEEPA, the statute in question here, to impose tariffs on fossil fuels or internal combustion engines because it considers climate change to be a national security threat. That was like an argument made by President Trump’s team on behalf of the tariffs to convey their belief that IEEPA had this huge economic policymaking power within it. And Justice Gorsuch was like, no, no, no, it doesn’t let you do that. And it also doesn’t let you impose these tariffs on all these other countries. OK, so I will say I have basically spent every moment up until now not learning about the other tariff authorities. They all are like known by a different number. And it always seemed like people were mentioning a new one. So can you walk us through just like with IEEPA out of the way, what are the other things? Authorities or powers under the law that have been used to impose tariffs on the past or that are seen as kind of being the other powers the president could invoke here if he wanted to keep slapping tariffs on major trading partners?
Jonas Nahm:
[6:00] So one of the big advantages of the IEEPA path for the administration was that it didn’t really involve a lot of procedure. And they had a lot of discretion. Now, no more. But at the time, thinking that they could do this, they had a lot of discretion about how to do this, who to apply this to, which products to exempt, and how to change it very quickly. And so it was basically fairly unconstrained. And so the other authorities all come with more process. And many of them are already in place with more process. So I think one thing to maybe start with is that the IEEPA tariffs are only one part of this tariff stack, and that different products have other tariffs applied to them already. Some of them stack on top of one another, some of them don’t, but there are many kind of authorities in this space that are being used at the same time.
Jonas Nahm:
[6:51] The president came out today and said they’re going to impose 10% universal tariffs under the Section 122, which is from the Trade Act of 1974, which is really to address kind of a large and serious deficit, it can be done very immediately, but it’s capped at 15%. They said they’re going to use 10. The problem for them is that it expires in 150 days unless Congress extends it. So it can sort of stop the revenue loss from taking away the reciprocal and the fentanyl tariffs. It can buy time for permanent fixes, but itself is not really a permanent solution unless there’s congressional buy-in in 150 days, which seems somewhat unlikely. So that’s what they’ve already decided they’re going to use sort of as the bridge to get to these other authorities.
Jonas Nahm:
[7:40] There’s another tariff authority called Section 232, which is about national security related issues. And so there you need to have an investigation and then you can impose these tariffs. We have lots of these investigations ongoing. Some of them are already completed, but pharmaceuticals, robotics, chips, I mean, there’s a bunch of them that are out there. And so what they don’t like about this is that you have to have this investigation so it’s not immediate. it. And so it requires a little bit of process.
Robinson Meyer:
[8:11] Like a Commerce Department investigation, right? This is like a, it’s like a known process where they...
Jonas Nahm:
[8:18] Yeah, and there needs to be a hearing and yes, all of those things. So that’s 232. And then you have Section 301, which is about unfair trade practices. That also requires an investigation and a public hearing, kind of a common period where industry can weigh in. And so you could use that to recreate these tariffs on a country by country basis, the Section 232 tears are mostly at the sectoral level. So the investigations are about sectors that have national security implications, although that has also been stretched widely by this administration. We’ve applied them to kitchen cabinets in this past year, so I don’t immediately follow the national security implications there. But, you know, there is some leeway there in how this is laid out. Section 301 is about unfair trade practices. And then there are the tariffs that were used, you know, almost 100 years ago after the depression, which is Section 338. That gets thrown around a lot. I think it has a lot less procedural constraints attached to it than these other ones. But it’s also untested in modern courts. And this would require the administration to prove that there’s discrimination against U.S. exports. And you could imagine a lot of litigation around how to define discrimination. And so these are sort of the broad authorities that exist and that the administration
Jonas Nahm:
[9:38] has signaled they will rely on. I think mostly the first three.
Robinson Meyer:
[9:41] It does seem like, I think one thing hearing this list is that there’s five other tariff authorities he could use. And while some of them have restrictions on time or duration or tariff rate, there’s actually still a good amount of like untested tariff authority out there in the law and if the president and his administration were like quite devoted they would be able to go out there and, figure out the limits of 338 or figure out the limits of of 301?
Jonas Nahm:
[10:17] Yeah, I mean, I think one thing to also think about is what is the purpose of these tariffs? Right. And so I think the justifications from the administration have been varied and changed over time. But, you know, they’ve taken in a significant amount of revenue, some 30 billion dollars a month from these tariffs. This was about four times as much as in the Biden administration. And so there is some money coming in from this. And so 122, the 10% immediately, would bring back some of that revenue that is otherwise lost. One question is what’s going to happen to refunds from the IEEPA tariffs? Are they going to have to pay this back? It seems like that’s also kind of a court battle that needs to be fought out. And the Supreme Court didn’t weigh in on that. But, you know, the estimates show that if you brought the 122 in at 10%, you would actually recoup a lot of the money that you would otherwise lose and the effective tariff rate in the U.S. Would go back from 10% to about 15%, roughly to where it was before the Supreme Court ruled on it.
Robinson Meyer:
[11:18] Has the effect of tariffs from the Trump administration been larger or smaller than what you thought it would be? Not necessarily in the immediate aftermath of “liberation day”, because he announced these giant tariffs and then kind of walked some of them back. But like the tariff rate has gone up a lot in the past year. Has the effect of that on the economy been more or less than you expected?
Jonas Nahm:
[11:43] I think that the industrial policy justification that they have also used is a completely different bucket. Right. So you can use this for revenue and then you can just sort of tax different sectors at different times as long as the sum overall is what you want it to be. From an industrial policy perspective, all of this uncertainty is not very helpful because if you’re thinking about companies making major investment decisions and you have this IEEPA Supreme Court case sort of hanging over the situation for the past year, now we don’t know exactly what they’re going to replace it with, but you’re making a $10 billion decision to build a new manufacturing plant. You may want to sit that out until you know what exactly the environment is and also what the environment is for the components that you need to import, right? So a lot of U.S. imports actually go into domestic manufacturing. And so it’s not just the product that we’re trying to kind of compete with by making it domestically, but also the inputs that we need to make that product here that are being affected.
Jonas Nahm:
[12:38] And so for those kinds of supply chain rewiring industrial policy decisions, you probably want a lot more certainty than we’ve had. And so the Supreme Court ruling against the IEEPA tariff justification is certainly more certainty in all of this. So we’ve now taken that off the list. But we are not clear what the new environment will look like and how long it’s going to stick around. And so from sort of an industrial policy perspective, that’s not really what you want. Ideally, what you would have is very predictable tariffs that give companies time to become competitive without the competition from abroad, and then also a very credible commitment to taking these tariffs away at some point so that the companies have an incentive to become competitive behind the tariff wall and then compete on their own. That’s sort of the ideal case. And we’re somewhat far from the ideal case. Given the uncertainty, given the lack of clarity on whether these things are going to stick around or not, or might be extended forever, and sort of the politics in the U.S. that make it much harder to take tariffs away than to impose them.
Robinson Meyer:
[15:26] I have heard from Democrats and like Democratic economic policymaker making staff, let’s say, that they really did believe that when Trump announced all these tariffs, that what people said it was going to crash the economy. And the fact that it like hasn’t necessarily crashed the economy has made some of them go, huh, well, maybe tariffs aren’t as bad as we kind of were told they were. And we should consider them as part of a broader economic playbook. Looking over the past year, have you been surprised by how resilient the U.S. economy has been despite all these new trade restrictions that didn’t exist two years ago?
Jonas Nahm:
[16:04] I think the answer to that question really depends on what you’re looking at specifically, right? So if this was supposed to be a manufacturing reshoring tool, in some ways it’s too early to tell whether it’ll work. We’ve seen this during the Biden administration. The Inflation Reduction Act came out. And by the time the election rolled around, a lot of these plants were still under construction. So in some ways, the theory was still untested on whether
Jonas Nahm:
[16:28] that would have changed people’s voting behavior, because we didn’t have enough time. And so in the same way, we don’t have enough time now. And we’ve seen manufacturing job losses over the last year, things have picked up a little bit recently, and sort of capacity utilization is up this month, or last month, rather in the U.S.. But I think that is from using existing plants more rather than building new ones in response to the tariffs. And of course, there are big announcements that have been made where companies that were going to build a plant in Canada are now building it in the U.S.. And some changes in decision-making have occurred as a result of it. But I think to really judge this as a sort of reassuring manufacturing industrial policy, it’s just too early. And I think the uncertainty really also then prolongs the period that it would take for companies to really do this. I mean, you’d want to think about that decision quite carefully. And while a lot of this stuff is still ongoing, I think companies have just avoided making big decisions.
Robinson Meyer:
[17:27] It’s also unclear to me how much of American trade tariffs actually did fall on in terms of specific bilateral relationships. So to be specific, like we talk about these fentanyl tariffs, which is the president’s name for what he said were 25% tariffs on Canada and Mexico and 10% tariffs on China and 10% tariffs on Canadian energy exports. And what, Those are big numbers, but what wound up happening in the immediate aftermath of his initial decision was that trade previously authorized under USMCA, the successor to NAFTA, was exempted or wasn’t fully subject to that tariff. And what that meant is that basically, for instance, no Canadian oil exports have ever been subject to this 10% tariff. It’s totally trade as normal between the two countries, at least on an energy basis, and yet. But notionally on the books, there is a threat of a much higher tariff, I suppose, if the president were to change his mind or in the future.
Jonas Nahm:
[18:31] I think you raise a really good point also because the effective tariff rate was around 15 or 16% or so, much lower than some of these headline numbers that were being thrown around. And that’s because we’ve exempted a lot of stuff, right? So coffee prices went up and we exempted Brazilian coffee imports. And we’ve taken other key industries out of this calculation. And USMCA-compliant goods were exempted from the fentanyl tariffs on Canada and Mexico. And so overall, the sort of number of products that are being impacted are much smaller than everything. And one of the interesting questions I think now is, for instance, in the Section 122 10% game that they’re trying to play, the process for exempting and excluding certain products works differently. And so if this really becomes a universal 10%, it would actually affect a lot of things that currently aren’t being tariffed by the reciprocal tariffs. And they don’t have a lot of time. So maybe that also plays into it where they don’t have the capacity to really plan it out strategically. And so if we’re now then moving to a world where a lot of critical inputs into domestic manufacturing are being tariffed at 10% that were previously exempt, that might have some negative consequences for the manufacturers that are trying to survive and all of this uncertainty.
Robinson Meyer:
[19:49] I guess that also removes like a huge opportunity for corruption, because one thing that would happen is the president would take not only like coffee out of the tariff. One thing that would happen is the president wouldn’t only remove tariffs on product categories like coffee, but he would just remove them from companies or put them back on other companies. And it seemed like this huge black box of potential corruption that there just wasn’t a lot of visibility into.
Robinson Meyer:
[20:17] Let’s talk about the sectors that we follow here. So what does this Supreme Court case mean, if anything, for electric vehicles?
Jonas Nahm:
[20:28] Maybe before we jump into this, just to remind everyone, so we’ve taken away one layer of this kind of cake of tariffs that we’ve built here over time. There’s Section 301, there’s Section 232s, there’s anti-dumping and countervailing duties. Sometimes there’s safeguards, Section 201. And so all of those things can apply to the same product. And so we’re sort of taking one piece out of that stack, but it means the others are still there.
Robinson Meyer:
[20:52] And crucially, this is not like a supermarket sheet cake with two layers or even a pound cake like you might.
Jonas Nahm:
[20:59] Make at home. No, it’s a fancy cake.
Robinson Meyer:
[21:00] It’s a Russian honey cake with 12 or 13 layers stacked upon each other of delectable trade-fine goodness.
Jonas Nahm:
[21:09] That’s exactly right. And so if we think about EVs, for instance, the European companies actually aren’t being tariffed under IEEPA. They’re tariffed under Section 232 for autos and parts, which is a totally different legal foundation. And so they are not benefiting from IEEPA going away. They might now get hit with 122s on top of what they were paying previously if that isn’t designed carefully. And so there’s a lot of open questions about what that actually looks like in practice, but it’s certainly not helping them. On the China side, which is probably our bigger concern, is that electric vehicles are already in the Section 301 penalty box and they get 100% on EVs and there’s tariffs on batteries under 301. So IEEPA was there with 10% for these products, but it wasn’t really the significant piece. And so I think there it doesn’t fundamentally change the landscape. But the problem, I think, is more that we have uncertainty and there’s this constant turmoil over what it’s going to be. And we have four meetings between Xi and Trump lined up for the year and he’s supposed to go there at the end of March and lots of uncertainty sort of in the policy space that IEEPA kind of feeds into, but wasn’t really that critical, I think.
Jonas Nahm:
[22:23] And on China specifically, the U.S.TR, the Office of the Trade Representative, launched in the fall a Section 301 investigation on China saying that they hadn’t adhered to the requirements of the phase one trade deal from the first Trump administration. They held the public hearings. They probably have a report ready to go. So they could reimpose also kind of on a national level 301 tariffs on China based on this finding, which could more than offset the loss of the Aiba tariffs.
Robinson Meyer:
[22:53] Okay, next sector. So what does this mean for solar? Because one interesting subplot here that my colleague Matt Zeitlin was talking about earlier today is that after “liberation day”, Wall Street became very convinced that First Solar, this U.S. solar manufacturing firm, was going to be the huge beneficiary of this new Trumpian tariff regime. And it really has not been at all. It’s like, it turned out that a lot of its inputs had new tariffs on them, that it really didn’t affect its business very much. But there are a lot of tariffs on solar. Are they that go back all the way to the Biden administration or the first Trump administration? Were those issued under IEEPA? And what is their current status?
Jonas Nahm:
[23:36] Solar was affected by the IEEPA layer in China, for instance, but there are other tariffs in place that are much more significant. And then on China and also Southeast Asian suppliers, there are anti-dumping and countervailing duties in place that are issued to specific companies. And so the rate kind of depends on which company, but some of them are over 200%. So there you might have a loophole that like a new supplier springs up that isn’t yet affected by this countervailing duty regime. And so they might benefit. But I think there are two, the IEEPA story is only one layer. We had Section 201 safeguards on solar that I think were expiring in February this year. So that layer was ending and now IEEPA is ending. But Section 301 on China and the ADECVDs remain in place and I think are going
Jonas Nahm:
[24:26] to make it unlikely that we see the sudden onslaught of Chinese supply.
Robinson Meyer:
[24:30] Are there any other kind of sectors to talk about here, you know, really affected by this or, I don’t know, data center inputs?
Jonas Nahm:
[24:41] Wind, I think, was exposed to the IEEPA layer to some degree, but I think the other question is more broadly, what are we doing with the domestic wind industry? There’s also a 232 national security investigation that is ongoing on wind that they could switch to as a justification, both on wind turbines and turbine parts. And so there, I think we might see some sort of temporary IEEPA relief, especially for inputs like metals and so on that are now coming in, perhaps at different prices. I don’t know if that can really help the wind industry overcome the broader headwinds that they’re facing with this administration. But, you know, if there is a real positive impact, I would expect them to very quickly switch to the 232 justification to make up for it. I think on data centers, it’s interesting.
Jonas Nahm:
[25:29] Data centers import a huge amount of equipment, right? So servers, networking, equipment, power distribution, cooling, switch, there’s all this stuff that goes into a data center. And if IEEPA went away and nothing replaces it, that might actually be a meaningful relief for a lot of that stack. But now under this 10% 122 surcharge, it’s coming back. And if some of these exemptions that we had in place for some of these components in order to support domestic data center build out are not included, and we have to see how they actually implement this, this could be quite negative. But to me, this is really a story at this point of thinking about this way more as a revenue source than a strategic industrial policy that’s trying to reshore certain sectors. And the more we change it up and switch from one authority to another, the more it becomes a revenue story because the actual economic impact in terms of reshoring is going to be less and less.
Robinson Meyer:
[26:22] So one thing I’m taking from this conversation is that while clean energy and energy inputs might get a tiny bit of relief, largely they were already subject to this existing stack of pre-existing tariff authorities under other laws. And so they might benefit from like some economic tailwinds from this, but it’s not like Chinese or Southeast Asian solar panels are going to suddenly
Robinson Meyer:
[26:50] be available in the United States at cost. Stepping back then, what is your read of how this ruling fits into the Trump administration’s trade policy, and I think broadly, America’s attempt to formulate some kind of industrial policy that now started with the first Trump administration, was continued and changed by the Biden administration, and now soldiers on under the second Trump administration.
Jonas Nahm:
[27:19] If I think about this broadly in terms of sort of economic policymaking, the tariffs are one tool you can use to shape the nature and structure and composition of the domestic economy. In many ways, what I think is much more important is what do you do behind the tariff wall to really help companies build competitive manufacturing capacity, for instance, right? And the tariffs themselves are not really enough to do much there. And a lot of the incentives and sort of support that, for instance, the Inflation Reduction Act included, that have been taken away or it’s shortened significantly. And so we’re doing kind of less on the domestic economy and we’re doing more at the border. But I think ideally you would do
Jonas Nahm:
[28:08] Much more certainty at the border, and then combine it with a domestic strategy. And I think we’re seeing some of this now happen kind of in the critical mineral space, you know, Vault, Forge, all these kinds of new initiatives that are being pushed out by the administration to look at the demand side, and kind of create more stable markets for these technologies, for instance. So slow beginnings of kind of the supply side and demand side match in pairing different industrial policy tools. But in some ways, I think this tariff game has been a huge distraction from the actual work that we need to do on vocational training, on financing for manufacturing, on creating stable demand for these technologies that we want to make domestically so that companies can get financing and invest. And so looking at trade policy in that kind of broader picture, it looks more like a revenue policy than an industrial policy because it’s not really coordinated with these other elements.
Robinson Meyer:
[29:05] I think we’ll have to leave it there. Jonas Nahm, thank you so much.
Jonas Nahm:
[29:09] Thank you for having me on.
Robinson Meyer:
[29:14] And that will do it for us today. Thank you so much for joining us on this special weekend emergency edition of Shift Key. If you enjoyed Shift Key, then leave us a review or send this episode to your friends. You can follow me on X or Bluesky or LinkedIn, all of the above, under my name, Robinson Meyer. We’ll be back next week with at least one new episode of Shift Key for you until then Shift Key is a production of Heatmap News. Our editors are Jillian Goodman and Nico Lauricella, multimedia editing audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Kromelow. Thanks so much for listening and see you next week.