Trump’s war on Iran hands China clean-energy and EV wins

Donald Trump’s love affair with all fuels grubby and ruinous to the planet is backfiring and handing China a gift. The rising prices for gasoline, diesel, coal and natural gas are pushing industries and households toward renewable power and electric vehicles, solidifying China’s lead in these global industries – and leaving the United States trailing behind.

While governments and consumers often resist technological change out of ignorance or fear that the new gizmos will destroy more jobs than they create, Mr. Trump went into full dinosaur mode when he lurched into the White House for the second time in 2025.

He removed federal financial and regulatory support for renewables and EVs that were launched by Joe Biden, his predecessor, and made life easy for fossil fuels. Emissions constraints were rolled back and millions of hectares of federal land, including Indigenous and protected wildlife areas, were opened for his “drill, baby, drill” campaign. He even killed funding for EV charging points (though mostly in blue states).

In one sense, it worked. The United States is a net energy exporter – it produces more than it consumes – and solidified its position as the world’s largest oil producer. The average American didn’t care that Mr. Trump’s love affair with petroleum put renewable energy into reverse, eliminating jobs as projects were cancelled; the gusher of hydrocarbons kept fill-up prices low.

But it didn’t work for long. On Feb. 28, the U.S. and Israel attacked Iran. Oil and natural gas prices took wing when Iran retaliated by closing the Strait of Hormuz. Today, the average price of a gallon of diesel is US$6.33 (and US$8.50 in California), up from US$3.65 a year ago, according to the AAA Fuel Prices monitor. Regular gasoline is US$4.33, up from US$3.05.

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Prices all over the world have climbed by similar margins, driving up inflation and government bond yields and driving down the U.S. Republicans’ popularity ratings ahead of the U.S. midterm elections. Mr. Trump’s desperation to put a lid on prices for diesel were reflected in his cynical deal with Russia to lift the sanctions on exports of the fuel.

The high energy prices are driving industrial and consumer-choice changes that have a historical precedent. In 1973 and 1974, the Arab oil embargo sent oil prices up nearly fourfold. Americans (and Canadians) stopped buying V8-powered muscle cars and land yachts and went for small four-cylinder boxes on wheels. Goodbye Boss Mustangs; hello Chevy Chevettes. Later that decade, President Jimmy Carter installed solar water panels on the White House roof (his successor, Ronald Reagan, a Republican, removed them).

Today, the Hormuz-inspired energy crisis is pushing industries, businesses and consumers toward electrical power, preferably of the renewable kind. Now you know why China is smiling.

China may still love burning coal, but it is the world leader in electrical power systems, including wind vanes, solar panels and – now – EVs. It is China’s BYD, not Tesla, that is the world’s leading producer of EVs. BYD is China’s top-selling car brand and its models are becoming ubiquitous all over the world, except in the United States, which slapped 100-per-cent tariffs on Chinese EVs, plus 25-per-cent tariffs on lithium-ion batteries and 50 per cent on solar cells (Canadian tariffs on Chinese EVS were also 100 per cent, but the Mark Carney government is allowing 49,000 of them into Canada at greatly reduced rates).

China’s lead in these industries, especially in EVs, has accelerated since the Iran war started and the conflict expanded to include Houthi attacks on Saudi airports and oil sites. High oil prices are driving the new lunge for EVs. On Friday, Brent crude, the international benchmark, traded at US$106 a barrel, up 73 per cent over 12 months. Nikkei Asia reported that, for the first time, sales of new gasoline-powered cars globally shrank to less than 50 per cent in the first half of 2026. Only five years ago, they held almost three-quarters of the new-car market.

EV sales in the European Union, plus Britain, Switzerland and Norway, rose 52 per cent in August from a year earlier. They were up 75 per cent in Germany as gasoline hit the equivalent of US$10 a gallon. In the export market, Chinese EV sales are surging. They have, for instance, captured 70 per cent of the Mexican EV market. Meanwhile, China has nailed down its control of the global market for wind-power equipment, at about 70 per cent, and photovoltaic modules, at about 80 per cent, according to the China Electric Power Planning and Engineering Institute.

Under Mr. Trump, the United States has become a laggard in these industries. EV sales there represent less than 7 per cent of sales. Meanwhile, the President’s war on wind farms continues – he hates them. Talent tends to follow production and the clean-energy talent is going to China and, to lesser extents, South Korea and Europe. It will be hard for any enlightened new U.S. president to take the lead in zero-emissions products, including EVs. For that, Mr. Trump and his senseless war on Iran can take the blame. China wins the industrial game again.