With a new presidential administration and a new majority in Michigan’s legislature on the horizon, MichAuto’s Government and Community Relations Director, Paul Corbett, highlights the top federal and state policies that the MichAuto team is watching during lame duck season and into the new year that can affect Michigan’s signature industry.
What to Expect Now in Lansing During Lame Duck
In an effort to fight the extreme Earned Sick Time and Minimum Wage mandates, House Bills 6056 and 6057 have been referred to the House Regulatory Reform Committee and are expected to go through the committee process. However, with only a handful of session days remaining and the five-day layover rule for bills in 2024, getting these two amendment bills through the House, Senate, and Gov. Gretchen Whitmer’s desk for signature as soon as possible is crucial.
Related: Support Amendments for 2025 Earned Sick Time Mandate and Minimum Wage
There have been a variety of ambitious climate-related laws aimed at better facilitating EV adoption, especially in the past two years through the Whitmer Administration and Democrat-controlled legislature. Parts of this climate agenda that had yet to be realized will now likely face increased challenges.
On the economic development front, the House has passed a revised version of the long-sought R&D tax credit legislation, and the new SOAR deal remains a priority and focus of bipartisan negotiations. Legislation to establish the Michigan Innovation Fund, which was part of this year’s budget, also passed the House.
What Might Come at the Federal Level
As in his first term in office, President Donald Trump is likely to impose new tariffs on imported goods, including 10-20% on all goods coming into the U.S. The new administration is also expected to maintain or increase a 100% tariff on Chinese-made EVs and has proposed a 60% tariff on all Chinese goods. In the past, Trump has also proposed a 25% tariff on all goods coming from Mexico.
Several provisions of the 2017 Tax Cuts and Jobs Act (TCJA) will expire at the end of 2025 if there is no legislative action. This would mean marginal income rates would revert to higher levels, and, notably for the automotive industry, favorable treatment of certain research costs will need an extension. Significantly, the reduction in the corporate income tax made law by the TCJA will not expire.
The new administration and GOP gains in Congress could help pass the Energy Permitting Reform Act, which the automotive industry strongly supports to speed the development and processing of raw materials and rare earths used to build batteries and engines for EVs. The passage of the Inflation Reduction Act was initially meant to be tied to the passage of permitting reform, thus the provisions in that law requiring domestic sourcing of batteries, but it never came to pass. Strong bipartisan support still exists for permitting reform to create more clean energy projects and spur domestic job creation.
Further, parts of the Inflation Reduction Act may be repealed, which could mean the end of generous EV tax credits.
Finally, the new administration will likely roll back ambitious fuel economy standards set by the Biden Administration, such as repealing generous EV tax credits in the Inflation Reduction Act. The rollback could be a significant disincentive for consumers and automakers to move toward EVs.
MichAuto will continue to monitor these and other policy updates related to Michigan’s automotive and mobility industry.