Short-Term Gains, Long-Term Liability, and a Competitive Disaster in the Making
Lee Zeldin, the new EPA administrator, just took a wrecking ball to decades of environmental regulation. In one move, the agency’s mission shifted from protecting public health to cutting costs for polluters. Tailpipe emissions standards? Gone. Mercury pollution rules? Axed. Carbon limits for coal plants? Shredded.
As the oil and gas industry, heavy industry and legacy automakers gorge at this all-you-can-eat buffet, it’s worth considering the price of indigestion the morning after, and asking themselves:
- How long will this last?
- What happens when the regulatory pendulum swings back?
- Are they about to become a legal, financial, and reputational liability?
The loosest environmental regime in a generation will backfire on U.S. manufacturers faster than they think. And they should prepare now.
Deregulation Today, Lawsuits and Compliance Nightmares Tomorrow
Regulatory rollbacks don’t erase liability—they just delay it. And when the rules return, the companies that took advantage will be first in line for lawsuits, retroactive fines, and costly compliance overhauls.
- The EPA just made it easier for manufacturers to dump pollutants—but legal precedent shows that when rules tighten again, companies can be held responsible for pollution they caused under previous administrations. DuPont and 3M are now paying billions for PFAS contamination that was once considered legal.
- California, New York, and Illinois aren’t rolling back anything, and their environmental laws often set national standards. A factory that violates those rules is still in trouble.
- Betting on permanently loose regulations is a mistake. Product safety rules in the 1990s followed the same cycle—companies that ignored them ended up crushed by lawsuits.
If environmental rules snap back in 2029, will manufacturers be able to afford the cleanup bill?
The U.S. Just Made Itself a Global Compliance Nightmare
EPA rules alone don’t drive global trade. The EU, China, and corporate buyers like Apple, Amazon, and Walmart are all tightening environmental standards, not loosening them.
- The EU’s Carbon Border Adjustment Mechanism (CBAM) is already in effect. If a U.S. factory produces more CO₂ per unit than an EU competitor, it will pay an import tax. The EPA’s rollback just made that worse.
- The EU is cracking down on high-pollution imports. California has already banned diesel truck sales after 2036. If U.S. manufacturers fall behind in clean production, they may find entire export markets closing their doors.
- Fortune 500 supply chains don’t care about EPA politics. If a supplier’s pollution exceeds ESG limits, it loses the contract.
Is it worth having U.S. goods banned or taxed out of foreign markets?
I’ve Seen This Playbook Before. It Was a Disaster.
From 2006 to 2015, I lived in China and saw firsthand what happens when unregulated industrial growth collides with public outrage.
- Beijing’s “Airpocalypse” shut down entire factories overnight.
- 16,000 dead pigs floated down the Huangpu River in Shanghai – a source of drinking water.
- Companies that cut corners suddenly faced massive retroactive fines.
- Foreign investors fled, betting on markets with clearer long-term policies.
- My daughter was hospitalized due to air pollution-related pneumonia, and we decided to leave China as well.
Manufacturers that bet on weak regulations will be blindsided when U.S. states, the EU, and global buyers force them to clean up—or shut down.
Cleantech and Green Manufacturing Just Got Kneecapped
China made a major pivot towards renewable energy and turned its experience with environmental pollution into a national rallying cry towards growing its cleantech industry.
The U.S. government has devoted significant resources towards doing the same. But if you’re in EVs, solar, carbon capture, or any form of clean automotive or industrial tech, the recent EPA rollbacks are a disaster.
- Federal tax credits, DOE loans, and government contracts for cleantech will dry up fast.
- Investment in green industries depends on policy stability. If the U.S. keeps playing regulatory whack-a-mole, institutional investors will put their money in the EU and China instead.
- The Biden administration had pushed for 67% of new cars to be electric by 2032. That regulatory certainty drove billions in investment in EV supply chains, battery plants, and infrastructure. Now, automakers have the option to go back to gas. Some will. That freezes EV adoption in the U.S. just as China surges ahead.
If investors move their money elsewhere, how do these industries sustain their business models?
Don’t Be Shortsighted
The long-term trajectory globally is clear. U.S. manufacturers have two choices.
- Use this time to invest in future-proofing. Assume regulations will return sooner than later, and build cleaner, more resilient supply chains before it’s mandatory.
- Gamble on a permanently loose regulatory environment. If that bet is wrong, they’ll end up caught in multi-billion-dollar lawsuits for “legal” pollution.
The smart move is to prepare now. The risky move is to celebrate and do nothing.
The companies that think ahead will dominate the next decade. The ones that don’t will be too busy fighting lawsuits and trade barriers to stay competitive.
