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Most nonprofit boards can do whatever they want.

Surely you’ve heard by now. On Friday, the board of directors of OpenAI, the world-bestriding startup at the center of the new artificial intelligence boom, fired its chief executive, Sam Altman. He had not been “consistently candid” with the board, the company said, setting in motion a coup — and potential counter-coup — that has transfixed the tech, business, and media industries for the past 72 hours.
OpenAI is — was? — a strange organization. Until last week, it was both the country’s hottest new tech company and an independent nonprofit devoted to ensuring that a hypothetical, hyper-intelligent AI “benefits all of humanity.” The nonprofit board owned and controlled the for-profit startup, but it did not fund it entirely; the startup could and did accept outside investment, such as a $13 billion infusion from Microsoft.
This kind of dual nonprofit/for-profit structure isn’t uncommon in the tech industry. The encrypted messaging app Signal, for instance, is owned by a foundation, as is the company that makes the cheap, programmable microchip Raspberry Pi. The open-source browser Firefox is overseen by the Mozilla Foundation.
But OpenAI’s structure is unusually convoluted, with two nested holding companies and a growing split between who was providing the money (Microsoft) and who ostensibly controlled operations (the nonprofit board). That tension between the nonprofit board and the for-profit company is what ultimately ripped apart OpenAI, because when the people with control (the board) tried to fire Altman, the people with the money (Microsoft) said no. As I write this, Microsoft seems likely to win.
This may all seem remote from what we cover here at Heatmap. Other than the fact that ChatGPT devours electricity, OpenAI doesn’t obviously have anything to do with climate change, electric vehicles, or the energy transition. Sometimes I even have the sense that many climate advocates take a certain delight in high-profile AI setbacks, because they resent competing with it for existential-risk airtime.
Yet OpenAI’s schism is a warning for climate world. Strip back the money, the apocalypticism, the big ideas and Terminator references, and OpenAI is fundamentally a story about nonprofit governance. When a majority of the board decided to knock Altman from his perch, nobody could stop them. They alone decided to torch $80 billion in market value overnight and set their institution on fire. Whether that was the right or wrong choice, it illustrates how nonprofit organizations — especially those that, like OpenAI, are controlled solely by a board of directors — act with an unusual amount of arbitrary authority.
Why does that matter for the climate or environmental movement? Because the climate and energy world is absolutely teeming with nonprofit organizations — and many of them are just as unconstrained, just as willfully wacky, as OpenAI.
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Let’s step back. Nonprofits can generally be governed in two ways. (Apologies to nonprofit lawyers in the audience: I’m about to vastly simplify your specialty.) The first is a chapter- or membership-driven structure, in which a mass membership elects leaders to serve on a board of directors. Many unions, social clubs, and business groups take this form: Every few years, the members elect a new president or board of directors, who lead the organization for the next few years.
The other way is a so-called “board-only” organization. In this structure, the nonprofit’s board of directors leads the organization and does not answer to a membership or chapter. (There is often no membership to answer to.) When a vacancy opens up on the board, its remaining members appoint a replacement, perpetuating itself over time.
OpenAI was just such a board-only organization. Even though Altman was CEO, OpenAI was led officially by its board of directors.
This is a stranger way of running an organization than it may seem. For a small, private foundation, it may work just fine: Such an organization has no staff and probably meets rarely. (Most U.S. nonprofits are just this sort of organization.) But when a board-only nonprofit gets big — when it fulfills a crucial public purpose or employs hundreds or thousands of people — it faces an unusual lack of institutional constraints.
Consider, for instance, what life is like for a decently sized business, a small government agency, and a medium-sized nonprofit. The decently sized business is constantly buffeted by external forcing factors. Its creditors need to be repaid; it is battling for market share and product position. It faces market discipline or at least some kind of profit motive. It has to remain focused, competitive, and at least theoretically efficient.
The government agency, meanwhile, is constrained by public scrutiny and political oversight. Its bureaucrats and public servants are managed by elected officials, who are themselves accountable to the public. When a particularly important agency is not doing its job, voters can demand a change or elect new leadership.
Nonprofits can have some of the same built-in checks and balances — but only when they are controlled by members, and not by a board. If a members association embarrasses itself, for instance, or if it doesn’t carry out its mission, then its membership can vote out the board and elect new directors to replace them. But stakeholders have no such recourse for a board-only nonprofit. Insulated from market pressure and public oversight, board-only nonprofits are free to wander off into wackadoodle land.
The problem is that board-only nonprofits are only becoming more powerful — in fact, many of the nonprofits you know best are probably controlled solely by their board. In 2002, the Harvard political scientist Theda Skocpol observed that American civic life had undergone a rapid transformation: where it had once been full of membership-driven federations, such as the Lions Club or the League of Women Voters, it was now dominated by issues-focused advocacy groups.
From the late 19th to the mid-20th century, she wrote, America “had a uniquely balanced civic life, in which markets expanded but could not subsume civil society, in which governments at multiple levels deliberately and indirectly encouraged federated voluntary associations.” But from the 1960s to the 1990s, that old network fell apart. It was “bypassed and shoved to the side by a gaggle of professionally dominated advocacy groups and nonprofit institutions rarely attached to memberships worthy of the name,” Skocpol wrote.
The sheer number of groups exploded. In 1958, the Encyclopedia of Associations listed approximately 6,500 associations, Skocpol writes. By 1990, that number had more than tripled to 23,000. Today, the American Society of Association Executives — which is, just so we’re clear here, literally an association for associations — counts almost 1.9 million associations, including 1.2 million nonprofits.
This new network includes some nonprofits that claim to have members but are not in fact governed by them, such as the AARP. It includes “public citizen” or legal-advocacy groups, which watchdog legislation or fight for important precedents in the courts, such as Earthjustice, the Center for Biological Diversity, or Public Citizen itself. And it includes independent, mission-driven, and board-controlled nonprofits — such as OpenAI.
There is nothing wrong with these new groups per se. Many of them are inspired by the advocacy and legal organizations that won some of the Civil Rights Movement’s biggest victories. But unlike the member federations and civic associations that they largely replaced, these new groups don’t force Americans to engage with what their neighbors are thinking and feeling. So they “compartmentalize” America, in Skocpol’s words. Instead of articulating the views of a deep, national membership network, these groups essentially speak for a centralized and professionalized leadership corps — invariably located in a major city — who are armed with modern marketing techniques. And instead of fundraising through dues, fees, or tithes, these new groups depend on direct-mail operations, massive ad campaigns, and foundation grants.
This is the organizational superstructure on which much of the modern climate movement rests. When you read a climate news story, someone quoted in it will probably work for such a nonprofit. Many climate and energy policy experts spend at least part of their careers at some kind of nonprofit. Most climate or environmental news outlets — although not this one — are funded in whole or part through donations and foundation grants. And most climate initiatives that earn mainstream attention receive grants from a handful of foundations.
There is nothing necessarily wrong with this setup — and, of course, an equivalent network devoted to stopping and delaying climate policy exists to rival it on the right. But the entire design places an enormous amount of faith in the leaders of these nonprofits and foundations, and in the social strata that they occupy. If a nonprofit messes up, then only public attention or press coverage can right the ship. And there is simply not enough of either resource to keep these things on track.
That leads to odd resource allocation decisions, business units that seem to have no purpose (alongside teams that seem perpetually overworked), and decisions that frame otherwise decent policies in politically unpalatable ways. It regularly burns out people involved in climate organizations. And it means that much of the climate movement’s strategy is controlled by foundation officials and nonprofit directors. Like any other group of executives, these people are capable of deluding themselves about what is happening in the world; unlike other types of leaders, however, they face neither an angry electorate nor a ruthless market that will force them to update their worldview. The risk exists, then, that they could blunder into disaster — and take the climate movement with them.
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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.
NineDot Energy’s nine-fiigure bet on New York City is a huge sign from the marketplace.
Battery storage is moving full steam ahead in the Big Apple under new Mayor Zohran Mamdani.
NineDot Energy, the city’s largest battery storage developer, just raised more than $430 million in debt financing for 28 projects across the metro area, bringing the company’s overall project pipeline to more than 60 battery storage facilities across every borough except Manhattan. It’s a huge sign from the marketplace that investors remain confident the flashpoints in recent years over individual battery projects in New York City may fail to halt development overall. In an interview with me on Tuesday, NineDot CEO David Arfin said as much. “The last administration, the Adams administration, was very supportive of the transition to clean energy. We expect the Mamdani administration to be similar.”
It’s a big deal given that a year ago, the Moss Landing battery fire in California sparked a wave of fresh battery restrictions at the local level. We’ve been able to track at least seven battery storage fights in the boroughs so far, but we wouldn’t be surprised if the number was even higher. In other words, risk remains evident all over the place.
Asked where the fears over battery storage are heading, Arfin said it's “really hard to tell.”
“As we create more facts on the ground and have more operating batteries in New York, people will gain confidence or have less fear over how these systems operate and the positive nature of them,” he told me. “Infrastructure projects will introduce concern and reasonably so – people should know what’s going on there, what has been done to protect public safety. We share that concern. So I think the future is very bright for being able to build the cleaner infrastructure of the future, but it's not a straightforward path.”
In terms of new policy threats for development, local lawmakers are trying to create new setback requirements and bond rules. Sam Pirozzolo, a Staten Island area assemblyman, has been one of the local politicians most vocally opposed to battery storage without new regulations in place, citing how close projects can be to residences, because it's all happening in a city.
“If I was the CEO of NineDot I would probably be doing the same thing they’re doing now, and that is making sure my company is profitable,” Pirozzolo told me, explaining that in private conversations with the company, he’s made it clear his stance is that Staten Islanders “take the liability and no profit – you’re going to give money to the city of New York but not Staten Island.”
But onlookers also view the NineDot debt financing as a vote of confidence and believe the Mamdani administration may be better able to tackle the various little bouts of hysterics happening today over battery storage. Former mayor Eric Adams did have the City of Yes policy, which allowed for streamlined permitting. However, he didn’t use his pulpit to assuage battery fears. The hope is that the new mayor will use his ample charisma to deftly dispatch these flares.
“I’d be shocked if the administration wasn’t supportive,” said Jonathan Cohen, policy director for NY SEIA, stating Mamdani “has proven to be one of the most effective messengers in New York City politics in a long time and I think his success shows that for at least the majority of folks who turned out in the election, he is a trusted voice. It is an exercise that he has the tools to make this argument.”
City Hall couldn’t be reached for comment on this story. But it’s worth noting the likeliest pathway to any fresh action will come from the city council, then upwards. Hearings on potential legislation around battery storage siting only began late last year. In those hearings, it appears policymakers are erring on the side of safety instead of blanket restrictions.