Trump Decides to Make China Great Again, as the U.S. Exits the Paris Agreement

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President Trump’s decision to leave the Paris Accord is good news for China who is now poised to be the new economic superpower and leader in clean energy development.


Earlier today at the White House, President Donald Trump announced that he will be dissolving the United State’s commitment to the Paris Accord, and plans to either negotiate the deal or form a new one that is “fair” to the U.S. This news comes as a dismay to many, as the U.S. will be the only major country to leave the historical agreement, which united the world’s countries in the fight against climate change. In his decision to do so, not only has President Trump alienated important allies in Europe and Asia but has ironically handed over the technology leadership in a key segment of the energy economy to China, his biggest competitor.  

Despite encouragement from a majority of U.S. business leaders across the technology, automotive and energy sectors (and even the DOE Secretary Rick Perry) to stay in the agreement, Trump decided to pull out citing that the agreement is ”unfair,” “draconian” and would cost millions of American jobs. What he hasn’t considered are the political and economic implications on a global level. Here are the top 3 reasons why leaving the Paris Accord is foolish:


Weakened Relations with the EU and other Global Powers

Losing the support of the United States, the world’s largest economy, could potentially shake the very foundation of the Paris Accord. Citing that the agreement was expensive and unfair to the United States, Trump used the excuse that the carbon emissions reductions set forth by the Agreement are unlikely to be met anyway. Losing the support of the world’s second largest polluter could cause other countries to waiver in their support. On the other hand, it could strengthen their resolve towards reducing emissions, showing that support for global climate regimes is strong even without the United State’s support, further removing the U.S. along with Syria and Nicaragua from this global movement.

Trump’s isolationist approach towards national economic development has been reinforced by his decision. On a geopolitical and economic level, the consequences will likely be felt as relations tense with the EU. As evidenced by the reports from the recent G-7 conference, the U.S. is likely to be discredited as an economic partner and will be left out of their efforts towards developing green economies. If the EU were to impose policies around carbon trading protectionism, trade alliances could suffer heavily, further hurting the U.S. economy.


China Will Become the New Economic Superpower

Without even knowing it, Trump has handed over the reigns to China and other EU leaders in driving advanced energy development. While we’re still trying to mine coal in the U.S., China will effectively control the solar sector, Germany will emerge as the leader in electric vehicle manufacturing, and the two will dominate the wind production. As the rest of the world shifts towards a low carbon economy, the U.S. will be left out of the opportunity to help build the green economy of the future. Pulling out now would not only negatively impact our relations with other countries, but allow our competitors to get ahead of us. If Trump really wants to beat of the Chinese, solar, not coal, is the best way to do so, especially when it comes to creating more jobs in America.

As US and EU relations continue to drift apart, the EU is now prepared to take the lead on climate change, and turning to China as an economic partner. As they work together to strengthen Sino-European economic relations, both stand by their commitments to reduce greenhouse gas emissions. At the upcoming European Union-China summit in Brussels this month, the two sides plan to confirm their commitment to the Paris Agreement and will call on all parties to uphold the 2015 pact. It may seem that China’s aspirations to lead on economic globalization will be realised, and the U.S. will effectively be left behind


The Economic Genie is Out of the Bottle; There’s no Going back to Coal

It’s no secret that Trump is notorious for his love of coal. In his announcement, he added that he’d been invited to attend a number of mine openings in the coming weeks. However, the reality of the resurgence of not only coal but coal jobs is false. Downward price pressures on natural gas, wind and solar have dramatically cut the costs of energy, in which coal cannot compete. Looking at the procurement trends over the last 5 years, all of these sources have been growing, while coal has been steeply declining. Trump’s lift on environmental regulations may make it easier to open new coal mines, but mining technology is replacing human jobs with machines.

In this case, economics ‘Trumps’ policy, and new build coal is decreasingly competitive thanks to cheaper, cleaner energy sources. That being said, the economic “genie” is already out of the bottle when it comes to renewables. We have now reached a fundamental point in our industry where the cost of renewables has undercut that of fossil fuels. Globally, over $349 billion has been invested into renewable generation, with roughly $63 billion in the in the U.S. market.China’s investment in energy is bypassing the United States as the world’s largest energy investor, as it continued to invest over $360 billion in its renewable power sector by 2020.

As unsubsidized solar continues to compete with fossil fuels, the potential for job creation continues to soar. We saw more American jobs created in the renewable and clean tech sector than in the fossil fuel industry in the past year, as solar now employs more Americans than oil, natural gas and coal combined. Wind alone is expected to drive a quarter of a million new jobs by 2020. However, China continues to lead the race, outpacing the U.S. by 500% in renewable job creation as they continue to invest in renewables and natural gas. With some 20 million renewable energy jobs expected to be created globally by 2020, China is poised to become the new economic superpower, leaving the U.S. behind.


The impact of President Trump’s decision today goes well beyond America’s domestic economy. By pulling out of this landmark agreement, he has effectively isolated America from the rest of the world in the fight against climate change. As the leader of the world’s largest superpower, he has given up the United States position as a leader in the development of green economies to the EU and China. However, if he is successful at renegotiating the Paris Agreement’s terms or bargaining a new agreement, there may be a chance for redemption. If not, the responsibility lies even more on cities and the private sector to keep driving the demand, innovation and investment. At Mercatus, we will continue our mission in enabling the multi-trillion-dollar transformation needed to support renewable technology. In order to succeed, power producers will need all of the investment funding and low-cost capital that they can get to put more renewable projects online. Because in our race to curb global warming, clean energy is our only hope for a sustainable future; and that’s something that goes beyond one president.

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Name Chaoyan Zhang Role/Job Title Product Strategy Associate How long have you worked for Mercatus? 6 Months Location (City, State/Province, Country) New York City, USA