With more than $400bn in tax credits, grants and loans, the combined passage of the landmark Inflation Reduction/CHIPS and Science Acts marks both an extraordinary investment and a dramatic shift  in US economic, trade and foreign policy. 

 

In fact, the IRA has little to do with curbing inflation. Designed as a national green-technology industrial policy with an added emphasis on bolstering a domestic semiconductor industry, the legislation marks an unprecedented step toward American self-reliance and technological dominance in a world just beginning to transition away from oil, and into to a green, autonomous and AI-dominated economy. 

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At the same time, the IRA/CHIPS and Science Acts reflect a fundamental change in US trade policy away from the free-market, globally-collaborative philosophy pushed by the US (and reflected in the WTO) for decades.  The legislation provides for huge subsidies and tax credits to companies investing in renewable energy and semi-conductor technologies – as long as the products and the components are made in America.

 

The stated goal is to "de-risk" the American economy by diversifying supply chains, rather than outright decoupling from the massive Chinese market place. Yet some say this unprecedented level of investment is designed to help America take the lead in green-economy innovation, and a not-so-subtle effort to counter China’s potential future dominance in strategic technological growth sectors - solar panel equipment, electric and autonomous vehicles, batteries, semi-conductors and Artificial Intelligence. 

 

This remarkable level of investment in the US will stimulate green technological innovation and growth across the globe, bolstering the transition to renewables and creating a more stable supply of semiconductors and battery technology for the coming AI and Autonomous Vehicle economies of the future.

 

But as the implications of this transition begin to emerge, the IRA/CHIPS Act may also be seen as a declaration of economic and technological war with China and its erstwhile allies, forcing companies and countries around the world to choose sides in a global struggle of competing technology blocs. 

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Join Dale Neef for a 1-hour talk on the economic and geopolitical implications of this extraordinary new level of American leadership and investment in emerging technologies.