3 Recent Trump Administration HVAC Actions Explained

But let’s slow down a minute and take a look at these three items. They might not be as scary as you think. 

Topic 1: DOE postpones HVAC efficiency standards.  

We recently wrote an article on this news, and I received some panic emails. First, it is very important to understand that this only applies to upcoming efficiency standards and not anything in our rearview mirror. 

Industry leaders did get confirmation from DOE leadership that the mention of central air conditioners only applied to the test procedure final rule that was released Jan. 6. There will be no rollbacks of prior efficiency standards. Some folks were concerned that this would change the minimum HVAC efficiency standards that were established a few years back. Again, that is not the case. In fact, there is actually no recently finalized air conditioner efficiency standard to delay at this time.  

As for the standards that will need to be established in the future, the Energy Policy and Conservation Act has an “anti-backsliding” provision that states that no new appliance standard can be weaker than the previous standard. Congress governs the efficiency laws, so both the House of Representatives and the Senate would need to repeal those laws. 

So, the industry is not going to go back on efficiency standards for air conditioners, furnaces, water heaters, walk-in coolers and freezers, or commercial refrigeration equipment. Not to wade too deep into the Beltway waters, but there is something called the Congressional Review Act that could vacate some of the recently published rules. But people I trust do not think that is going to happen with the HVAC rules, so I won’t muddy the waters. 

Is the government going to slow down how quickly the minimum efficiency levels will be increasing? I think it is fair to say that it will. Whether that is good or bad can be debated.  

But focusing on the positive, this slowdown might be one way to control the ever-increasing prices of HVAC equipment and the sticker shock a lot of customers are receiving.  

As the Air Conditioning Contractors of America pointed out, “The postponement allows contractors to continue offering a wider range of equipment at various price points. Without the stricter standards in place, the market retains more options for contractors and consumers.” 

Topic 2: President Trump establishes a 25% tariff on all steel and aluminum imports. He also proposed a 25% tariff against imports from Mexico and Canada but established a 30-day pause on Feb. 3. A 10% tariff on Chinese goods went into effect on Feb. 4.  

OK, a lot to unpack on this one. First, it’s important to note that this is the second tariff increase on steel and aluminum in six months. Back in September, the Biden administration raised tariffs on steel and aluminum from China. The difference this time is it’s more than just China. 

Canada is the largest importer of steel to the United States, followed by Brazil and Mexico. These three countries account for more than 80% of all steel imports to the U.S. Obviously, many HVAC systems have steel and aluminum, so prices are likely to increase. This is something HVAC contractors will not like to see.  

Also, the supply chain becomes a concern. A fair amount of HVAC manufacturers receive components from China, while some HVAC companies outside of North America manufacture products exclusively in China. 

Now on to the Canada and Mexico tariffs that might return after March 3. It is probably a coin flip on whether they will be implemented or this is simply a negotiation plan by the administration. There is plenty of evidence to support both arguments. 

Could this play a role in the HVAC efficiency question? It can be argued that this would level the playing field a bit between high-efficiency products and products that just attain the minimum standards. Traditionally, the products being made in Mexico tend to represent the more basic, lower-efficiency products, while those that are manufactured in the U.S. tend to be high-efficiency equipment. Not 100%, of course, but certainly a trend. 

This might even the playing field and lead to more high-efficiency products being installed. If so, that is a better profit margin for contractors, distributors, and manufacturers. 

Topic 3: President Trump pauses IRA funding via executive order.  

In another break from the previous administration, President Trump signed an executive order during his first day back in office which paused major funding initiatives tied to the clean energy movement. The “Unleashing American Energy” executive order calls for the termination of the "Green New Deal," and orders all agencies to immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 (IRA) or the Infrastructure Investment and Jobs Act. 

For the HVAC industry, this has the biggest impact on the rebate program for heat pumps that were federally funded but being handed out by the states. Contractors in the 11 states and D.C. who have launched at least partial programs prior to the order should have some confidence that those programs will continue.  

Contractors should be communicating with their customers to explain the fluid nature of these rebate programs. This is just another opportunity to differentiate yourself from the contractors that are playing catchup. Highlighting your expertise in navigating policy changes can certainly win you customers. 

It would take an act of Congress to repeal all or even part of the IRA. This is where Trump could hit a bump in the road. It will be difficult this time around to keep that voting bloc of Senate and House Republicans together. Last time, the IRA was strictly a party-line vote. 

Important to point out that the executive order does not impact tax credits — like the 25C tax credit that many contractors offer for installing high-efficiency systems. Homeowners who qualify for the tax credit can apply it to their tax returns when they file. 

It also does not impact the 45L tax credit or the 179D Commercial Building Tax Deduction that saw increases in their value in the Inflation Reduction Act. It would take an act of Congress to amend these incentives. 

It is important to stay on top of all this news, but the key takeaway here is that HVAC contractors do not need to panic.